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 certain original and corrected information returns filed
electronically or magnetically to participating states for approved
filers.

* For approval, the filer must submit a test file coded for this
program. See Part A, Sec. 7, Test Files.

* For magnetic media test files, attach a letter to the Form 4804
requesting to participate in the CF/SF Program. The Form 4804 or letter is
not required for tests sent electronically.

* Approved filers are sent a Form 6847, Consent for Internal Revenue
Service to Release Tax Information, which must be completed and returned
to IRS/MCC. A separate form is required for each payer.


.01 The Combined Federal/State Filing (CF/SF) Program was established
to simplify information returns filing for the taxpayer. IRS/MCC will
forward this information to participating states free of charge for
approved filers. Separate reporting to those states is not necessary. The
following information returns may be filed under the Combined
Federal/State Filing Program:

Form 1099-DIV -- Dividends and Distributions
Form 1099-G -- Certain Government Payments
Form 1099-INT -- Interest Income
Form 1099-MISC -- Miscellaneous Income
Form 1099-OID -- Original Issue Discount
Form 1099-PATR -- Taxable Distributions Received From Cooperatives
Form 1099-R -- Distributions From Pensions, Annuities, Retirement
or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc.
Form 5498 -- IRA and Coverdell ESA Contribution Information


.02 To request approval to participate, a magnetic media test file
coded for this program must be submitted to IRS/MCC between November 1,
2002, and December 16, 2002. Electronic test files coded for this program
must be submitted between November 1, 2002, and February 15, 2003.

.03 Attach a letter to the Form 4804 submitted with the test file to
indicate a desire to participate in the Combined Federal/State Filing
Program. Test files sent electronically do not require the Form 4804 or
letter. If the test file is coded for the Combined Federal/State Filing
Program and is acceptable, an approval letter and Form 6847 will be sent
to the filer.

.04 A test file is only required for the first year. Each record, both
in the test and the actual data file, must conform to this Revenue
Procedure.

.05 If the test file is acceptable, IRS/MCC will send the filer an
approval letter, and a Form 6847, Consent for Internal Revenue Service to
Release Tax Information, which the payer must complete, sign, and return
to IRS/MCC before any tax information can be released to the state. Filers
must write their TCC on Form 6847.

.06 If the test file is not acceptable, IRS/MCC will send magnetic
media filers a letter indicating the problems. Electronic filers must dial
back within two days to the FIRE System to check the acceptability of
their test file. The new test file must be received by IRS/MCC no later
than December 16, 2002 for magnetic media, or February 15, 2003 for an
electronically filed test.

.07 A separate Form 6847 is required for each payer. A transmitter may
not combine payers on one Form 6847 even if acting as Attorney-in-Fact for
several payers. Form 6847 may be computer-generated as long as it includes
all information that is on the original form or it may be photocopied. If
the Form 6847 is signed by an Attorney-in-Fact, the written consent from
the payer must clearly indicate that the Attorney-in-Fact is empowered to
authorize release of the information.

.08 Only code the records for participating states and for those payers
who have submitted Form 6847.

.09 Some participating states require separate notification that the
payer is filing in this manner. Since IRS/MCC acts as a forwarding agent
only, it is the payer's responsibility to contact the appropriate states
for further information.

.10 All corrections properly coded for the Combined Federal/State
Filing Program will be forwarded to the participating states.

.11 Participating states and corresponding valid state codes are listed
in Table 1 of this section. The appropriate state code must be entered for
those documents that meet the state filing requirements; do not use state
abbreviations.

.12 Each state's filing requirements are subject to change by the
state. It is the payer's responsibility to contact the participating
states to verify their criteria.

.13 Upon submission of the actual files, the transmitter must be sure
of the following:

(a) All records must be coded exactly as required by this Revenue
Procedure.

(b) A State Totals "K" Record(s) for each state being reported must
follow the "C" Record.

(c) Payment amount totals and the valid participating state code must
be included in the State Totals "K" Record(s).

(d) The last "K" Record must be followed by an "A" Record or an End of
Transmission "F" Record (if this is the last record of the entire file).

TABLE 1. PARTICIPATING STATES AND THEIR CODES

State Code State Code
----- ---- ----- ----
Alabama 01 Maine 23
Arizona 04 Maryland 24
Arkansas 05 Massachusetts 25
California 06 Minnesota 27
Colorado 07 Mississippi 28
Connecticut 08 Missouri 29
Delaware 10 Montana 30
District of Columbia 11 Nebraska 31
Georgia 13 New Jersey 34
Hawaii 15 New Mexico 35
Idaho 16 North Carolina 37
Indiana 18 North Dakota 38
Iowa 19 South Carolina 45
Kansas 20 Virginia 51
Louisiana 22 Wisconsin 55


<<Sample File Layout for Combined Federal/State Filer omitted -- Kleinrock
Publishing>>


SEC. 14. PENALTIES ASSOCIATED WITH INFORMATION RETURNS

.01 The following penalties generally apply to the person required to
file information returns. The penalties apply to electronic/ magnetic
media filers as well as to paper filers.

.02 Failure To File Correct Information Returns by the Due Date
(Section 6721). If you fail to file a correct information return by the
due date and you cannot show reasonable cause, you may be subject to a
penalty. The penalty applies if you fail to file timely, you fail to
include all information required to be shown on a return, or you include
incorrect information on a return. The penalty also applies if you file on
paper when you were required to file on magnetic media, you report an
incorrect TIN or fail to report a TIN, or you fail to file paper forms
that are machine readable.

The amount of the penalty is based on when you file the correct
information return. The penalty is:

* $15 per information return if you correctly file within 30 days of
the due date of the return (See Part A, Sec. 9.01); maximum penalty
$75,000 per year ($25,000 for small businesses).

* $30 per information return if you correctly file more than 30 days
after the due date but by August 1; maximum penalty $150,000 per year
($50,000 for small businesses).

* $50 per information return if you file after August 1 or you do not
file required information returns; maximum penalty $250,000 per year
($100,000 for small businesses).


.03 A late filing penalty may be assessed for a replacement file which
is not returned by the required date. Files which require replacement more
than two times will also be subject to penalty. See Part A, Sec. 10, for
more information on replacement files.

.04 Intentional disregard of filing requirements. If any failure to
file a correct information return is due to intentional disregard of the
filing or correct information requirements, the penalty is at least $100
per information return with no maximum penalty.

.05 Failure To Furnish Correct Payee Statements (Section 6722). For
information regarding penalties which may apply to failure to furnish
correct payee statements, see General Instructions for Forms 1099, 1098,
5498, and W-2G.


SEC. 15. STATE ABBREVIATIONS

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

State Code State Code
----- ---- ----- ----
Alabama AL Missouri MO
Alaska AK Montana MT
American Samoa AS Nebraska NE
Arizona AZ Nevada NV
Arkansas AR New Hampshire NH
California CA New Jersey NJ
Colorado CO New Mexico NM
Connecticut CT New York NY
Delaware DE North Carolina NC
District of Columbia DC North Dakota ND
Federated States of Micronesia FM Northern Mariana Islands MP
Florida FL Ohio OH
Georgia GA Oklahoma OK
Guam GU Oregon OR
Hawaii HI Pennsylvania PA
Idaho ID Puerto Rico PR
Illinois IL Rhode Island RI
Indiana IN South Carolina SC
Iowa IA South Dakota SD
Kansas KS Tennessee TN
Kentucky KY Texas TX
Louisiana LA Utah UT
Maine ME Vermont VT
Marshall Islands MH Virginia VA
Maryland MD (U.S.) Virgin Islands VI
Massachusetts MA Washington WA
Michigan MI West Virginia WV
Minnesota MN Wisconsin WI
Mississippi MS Wyoming WY


.02 Filers must adhere to the city, state, and ZIP Code format for U.S.
addresses in the "B" Record. This also includes American Samoa, Federated
States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands,
Puerto Rico, and the U.S. Virgin Islands.

.03 For foreign country addresses, filers may use a 51 position free
format which should include city, province or state, postal code, and name
of country in this order. This is allowable only if a "1" (one) appears in
the Foreign Country Indicator, Field Position 247, of the "B" Record.

.04 When reporting APO/FPO addresses use the following format:

EXAMPLE:

Payee Name PVT Willard J. Doe
Mailing Address Company F, PSC Box 100
167 Infantry REGT
Payee City APO (or FPO)
Payee State AE, AA, or AP <*>
Payee ZIP Code 098010100

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


SEC. 16. MAJOR PROBLEMS ENCOUNTERED

IRS/MCC encourages filers to verify the format and content of each type
of record to ensure the accuracy of the data. This may eliminate the need
for IRS/MCC to request replacement files. This may be important for those
payers who have either had their files prepared by a service bureau or who
have purchased preprogrammed software packages.

Filers who engage a service bureau to prepare media on their behalf
should be careful not to report duplicate data which may generate penalty
notices.

The Major Problems Encountered lists some of the most frequently
encountered problems with electronic/magnetic files submitted to IRS/MCC.
These problems may result in IRS/MCC requesting replacement files. Some of
the problems resulted from not referring to this publication for
instructions.

1. Incorrect Format

* Multiple Files on diskettes -- Each diskette must contain only ONE
file, named IRSTAX. A file consists of one Transmitter "T" Record followed
by a Payer "A" Record, Payee "B" Records, End of Payer "C" Record, State
Totals "K" Record (if applicable for CF/SF Program), and the End of
Transmission "F" Record. A file can contain multiple Payer "A" Records,
but, only one Transmitter "T" Record. See Part D, Sec. 10, for file layout
diagram.

* Invalid record length -- ALL Records must be 750 Positions in length.

* Prior tax year data must be formatted in the current tax year format.
Be sure to use the current Revenue Procedure (Publication 1220) for
formatting prior tax year data.


2. Unable to read tape cartridge.

Please review all tape cartridge specifications carefully (See Part C,
Sections 1 and 2.)

3. No Form 4804, Transmittal of Information Returns Reported
Magnetically

Each shipment of media sent to IRS/MCC must include a signed Form 4804.
More than one type of media may be sent in the same shipment, (i.e.,
diskette, and tape cartridge) but must have a separate Form 4804 to
accompany each type of media.

4. Discrepancy Between IRS/MCC Totals and Totals in Payer "C" Records

The "C" Record is a summary record for a type of return for a given
payer. IRS compares the total number of payees and payment amounts in the
"B" records with totals in the "C" Records. The two totals must agree. Do
NOT enter negative amounts except when reporting Forms 1099-B. Money
amounts must be all numeric, right-justified and zero (0) filled. Do Not
Use Blanks.

5. The Payment Amount Fields in the "B" Record Do Not Correspond to the
Amount Codes in the "A" Record

The Amount Codes used in the "A" record MUST correspond with the
payment amount fields used in the "B" records. The amount codes must be
left-justified, in ascending order with the unused positions blank. For
Example: If the "B" records show payment amounts in payment amount fields
2, 4, and 7, then the "A" record must correspond with 2, 4, and 7 in the
amount codes field.

6. Incorrect TIN in Payer "A" Record

The Payer's TIN reported in positions 12-20 of the "A" record must be
nine numeric characters only. (Do Not Enter Hyphen.) The TIN and the First
Payer Name Line provided in the "A" record must correspond.

7. Incorrect Tax Year in the Transmitter "T" Record, Payer "A" Record
and the Payee "B" Records

The tax year in the transmitter, payer and payee records should reflect
the tax year of the information return being reported. For prior tax year
data, there must be a "P" in position 6 of the Transmitter "T" record.
This position must be blank for current tax year data.

8. Incorrect Reporting of Form W-2 Information to IRS

Form W-2 information is submitted to SSA and not to IRS/MCC. Any media
received at IRS/MCC that contains W-2 information will be forwarded to
SSA. The filer will be notified of this action by letter. To inquire about
filing Form W-2 information magnetically/electronically, call
1-800-SSA-6270.

9. Incorrect use of Test Indicator

When sending a test file, position 28 of the Transmitter "T" record
must contain a "T", otherwise blank fill.

10. Incorrect Format for TINs in the Payee "B" Record

TINs entered in position 12-20 of the Payee "B" record must consist of
nine numerics only. (Do Not Enter Hyphens.) Incorrect formatting of TINs
may result in a penalty.

Payers/Transmitters who submit data with missing TINs, and have taken
the required steps to obtain this information are encouraged to attach a
letter of explanation to the required Form 4804. This letter, however,
will not prevent backup withholding notices (CP2100 and CP2100A Notices)
or proposed penalties (Notice 972CG) for missing or incorrect TINs. For
penalty information, refer to the Penalty section of the 2002 General
Instructions for Forms 1099, 1098, 5498, and W-2G.


11. Distribution Codes for Form 1099-R Reported Incorrectly

For Forms 1099-R, there must be valid Distribution Code(s) in position
545-546 of the Payee "B" record. For valid codes (and combinations), see
Form 1099-R Distribution Code Chart 2002 in Part D. If only one
distribution code is required, it must be entered in position 545 and
position 546 must be blank. A blank in position 545 is not acceptable.

12. Incorrect Record Totals Listed on Form 4804

The Combined Total Payee Records listed on the Form 4804 (Block 6) are
used in the verification process of information returns. The figure in
this block must be the total number of payee "B" records contained on
individual piece of media submitted. A separate Form 4804 should be sent
for each piece of media that contains a file.

13. Missing Correction Indicator in Payee "B" Record

When a file is submitted as a correction file, there must be a
correction indictor, "G" or "C" in position 6 of the Payee "B" record. See
Part A, Sec. 11.


RT B. ELECTRONIC FILING SPECIFICATIONS

SEC. 1. GENERAL

.01 Electronic filing of Forms 1098, 1099, 5498, and W-2G, originals,
corrections, and replacements of information returns is offered as an
alternative to magnetic media (tape cartridge or diskette) or paper
filing, but is not a requirement. Transmitters filing electronically will
fulfill the magnetic media requirements for those payers who are required
to file magnetically. Payers who are under the filing threshold
requirement may also file electronically. If the original file was sent
magnetically, but IRS/MCC has requested a replacement file, the
replacement may be transmitted electronically. Also, if the original file
was submitted via magnetic media, any corrections may be transmitted
electronically.

.02 All electronic filing of information returns are received at
IRS/MCC via the FIRE (Filing Information Returns Electronically) System.
The FIRE System can be accessed via analog and ISDN BRI connections. The
system is designed to support the electronic filing of information returns
only. The telephone number for electronic filing is (304-262-2400).

.03 The electronic filing of information returns is not affiliated with
the Form 1040 electronic filing program. These two programs are totally
independent, and filers must obtain separate approval to participate in
each of them. All inquiries concerning the electronic filing of
information returns should be directed to IRS/MCC. IRS/MCC personnel
cannot answer questions or assist taxpayers in the filing of Form 1040 and
will direct taxpayers, to the Customer Service toll-free number
(1-800-829-1040).

.04 Files submitted to IRS/MCC electronically must be in standard ASCII
code. Do not send magnetic media or paper forms with the same information
as the electronically submitted files. This would create duplicate
reporting resulting in penalty notices.

.05 The record formats of the "T", "A", "B", "C", "K", and "F" records
are the same for both electronically and magnetically filed records. See
Part D, Record Format Specifications and Record Layouts.


SEC. 2. ADVANTAGES OF FILING ELECTRONICALLY

Some of the advantages of filing electronically are as follows:

(1) Paperless, no Form 4804 requirements.

(2) Results available within 1-2 workdays regarding the acceptability
of the data transmitted. It is the filer's responsibility to dial back in
and check results.

(3) Later due date than magnetic media or paper for electronically
filed Forms 1098, 1099, and W-2G (refer to Part A, Sec. 9.01).

(4) Allows more attempts than magnetic media filing to correct bad
files within a specific time frame before imposing penalties (refer to
Part B, Sec. 5.05).

(5) Better customer service due to on-line availability of
transmitter's files for research purposes.

(6) Extended period to test electronic files: November 1, 2002 to
February 15, 2003.


SEC. 3. ELECTRONIC FILING APPROVAL PROCEDURE

.01 Filers must obtain, or already have, a Transmitter Control Code
(TCC) assigned prior to submitting files electronically. (Filers who
currently have a TCC for magnetic media filing will not be assigned a
second TCC for electronic filing.) Refer to Part A, Sec. 6, for
information on how to obtain a TCC.

.02 Once a TCC is obtained, electronic filers assign their own logon
name, password and PIN (Personal Identification Number) and do not need
prior or special approval. See Part B, Sec. 6, for more information on the
PIN.

.03 If a filer is submitting files for more than one TCC, it is not
necessary to create a separate logon and password for each TCC.

.04 For all passwords, it is the user's responsibility to remember the
password and not allow the password to be compromised. Passwords are user
assigned at first logon and must be 8 alpha/numerics containing at least 1
uppercase, 1 lowercase, and 1 numeric. However, if filers forget their
password or PIN, call toll-free 1-866-455-7438 for assistance. The FIRE
System will require users to change their passwords on a yearly basis.


SEC. 4. TEST FILES

.01 Filers are not required to submit a test file; however, the
submission of a test file is encouraged for all new electronic filers to
test hardware and software. If filers wish to submit an electronic test
file for Tax Year 2002 (returns to be filed in 2003), it must be submitted
to IRS/MCC no earlier than November 1, 2002, and no later than February
15, 2003.

.02 If a filer encounters problems while transmitting the electronic
test file, contact IRS/MCC toll-free at 1-866-455-7438 for assistance.

.03 Filers can verify the status of the transmitted test data by
connecting to the FIRE System at 304-262-2400. This information will be
available within 1-2 workdays after the transmission is received by
IRS/MCC.

.04 Form 4804 is not required for test files submitted electronically.
See Part B, Sec. 6.

.05 A test file is required from filers who want approval for the
Combined Federal/State Filing Program. See Part A, Sec. 13, for further
details.


SEC. 5. ELECTRONIC SUBMISSIONS

.01 Electronically filed information may be submitted to IRS/MCC 24
hours a day, 7 days a week. Technical assistance will be available Monday
through Friday between 8:30 a.m. and 4:30 p.m. Eastern time by calling
toll-free at 1-866-455-7438.

.02 The FIRE System will be down from December 27, 2002, through
January 7, 2003. This allows IRS/MCC to update its system to reflect
current year changes.

.03 Data compression is encouraged when submitting information returns
electronically. WinZip and PKZip are acceptable compression packages. UNIX
COMPRESS may be acceptable; however, a test file is recommended to verify
compatibility. IRS/MCC cannot accept self-extracting zip files or
compressed files containing multiple files.

The time required to transmit information returns electronically will
vary depending on the modem speed and the type of data compression used,
if any. The time required to transmit a file can be reduced by as much as
95 percent by using compression.

The following are transmission rates achieved in test uploads at MCC
using compressed files. The transmission rates will vary depending on the
modem speeds.

Transmission
Speed in bps 1000 Records 10,000 Records 100,000 Records
------------ ------------ -------------- ---------------
19.2K 34 Sec. 6 Min. 60 Min.
56K 20 Sec. 3 1/2 Min. 33 Min.
128K (ISDN) 8 Sec. 1 Min. 10 Min.


.04 Files submitted electronically will be assigned a unique filename
by the FIRE System (the users may name files anything they choose from
their end). The filename assigned by the FIRE System will consist of
submission type (TEST, ORIG [original], CORR [correction], and REPL
[replacement]), the filer's TCC and a four digit number sequence. The
sequence number will be incremented for every file sent. For example, if
it is your first original file for the calendar year and your TCC is
44444, the IRS assigned filename would be ORIG.44444.0001. Record the
filename. This information will be needed by MCC to identify the file, if
assistance is required.

.05 If a file was submitted timely and is bad, the filer will have up
to 60 days from the day the file was transmitted or 4 replacement attempts
within that 60 day period, whichever comes first, to transmit an
acceptable file. If an acceptable file is not received within 60 days or
within 4 replacement attempts, then the payer could be subject to late
filing penalties. This only applies to files originally sent
electronically.

.06 The following definitions have been provided to help distinguish
between a correction and a replacement:

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

Note: Corrections should only be made to records that have been submitted
incorrectly, not the entire file.

* A replacement is an information return file sent by the filer because
FILE STATUS on the FIRE System indicated the original file was bad. After
the necessary changes have been made, the file must be transmitted through
the FIRE System. (See Note.)

Note: Filers should never transmit anything to IRS/MCC as a "Replacement"
file unless FILE STATUS on the FIRE System indicates the file is bad.

.07 The TCC in the Transmitter "T" Record must be the TCC used to
transmit the file; otherwise, the file will be considered an error.


SEC. 6. PIN REQUIREMENTS

.01 The Form 4804 is not required for electronic files. The user will
be prompted to create a PIN consisting of 10 numerics when establishing
their initial logon name and password.

.02 Filers must provide some on-line information, such as, company
name, contact person and telephone number, before establishing their PIN
number.

.03 The PIN is required each time a file is sent electronically and is
permission to release the file. An authorized agent may enter their PIN,
however, the payer is responsible for the accuracy of the returns. The
payer will be liable for penalties for failure to comply with filing
requirements. If you forget your PIN, please call toll-free 1-866-455-7438
for assistance.

.04 If the file is good, it is released for mainline processing 10
calendar days from receipt. Contact us toll-free 1-866-455-7438 within
this 10-day period if there is a reason the file should not be released
for further processing. If the file is bad, normal replacement procedures
are followed.


SEC. 7. ELECTRONIC FILING SPECIFICATIONS

.01 The FIRE System is designed exclusively for the filing of Forms
1042-S, 1098, 1099, 5498, 8027, W-2G and W-4..02 A transmitter must have a
TCC before a file can be transmitted. A TCC assigned for magnetic media
filing, should also be used for electronic filing.

.03 The results of the electronic transmission will be available in the
File Status area of the FIRE System within 1-2 business days. It is the
filer's responsibility to dial back to verify the acceptability of files
submitted by checking the File Status area of the system. Forms 1042-S,
8027 and W-4 require a longer processing time.

.04 Connect to the FIRE System by dialing 304-262-2400. This number
supports analog connections from 1200bps to 56Kbps or ISDN BRI 128Kbps.
The system can be accessed via Dial-up network/web browser (see Part B,
Sec. 8) or communications software such as Hyperterminal, Procomm,
PCAnywhere or other VT100 emulation products (see Part B, Sec.9). The
Dial-up network/ web browser (point-to-point) will provide an
Internet-like look, however, it is not the Internet.


SEC. 8. DIAL-UP NETWORK/BROWSER SPECIFICATIONS (WEB INTERFACE)

.01 The following are some general instructions (many of these may
already be set by default in your software):

Dial-up network settings:

(a) Set dial-up server type to PPP

(b) Set network protocol to TCP/IP

(c) Disable software compression

(d) Windows NT -- Disable PPP-LCP extensions by clicking the 'More'
option on the 'Dial' screen, then click on 'Edit entry and modem
properties' and the Server folder.

(e) Windows 2000 and XP -- Disable the LCP extension by going to your
Dial-up Networking Properties, Networking and Settings.


Browser settings:

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

(b) Enter the URL address of http://10.225.224.2 after you have
connected via dial-up. (Remember, this is a point-to-point connection, not
the Internet.)


.02 Before dialing have your TCC and EIN available.

.03 Due to the large number of communication products available, it is
impossible to provide specific information on all software/hardware
configurations. However, since most filers use Windows 95, 98, NT, 2000 or
ME software (more current versions are similar), the following
instructions are geared toward those products:

WEB-LIKE INTERFACE

Select Programs Accessories

Communications (Windows 98, NT, 2000)

Dial-Up Networking


FIRST TIME CONNECTING WITH DIAL-UP NETWORK (If you have logged on
previously, skip to Subsequent Dial-up Network Connections.)

The first time you dial-in, you will need to configure your Dial-Up
Networking.

Select "Make new connection".

Type a descriptive name for the system you are calling. Select your
modem.

Click "Next".

Enter area code 304 and telephone number 262-2400.

Click "Next".

When you receive a message that you have successfully created a new
Dial-Up Networking connection, click "Finish".

Click "Connect" to dial. If you are prompted for a user name and
password, complete according to local procedures; otherwise, click "OK".

When you receive the message that you have connected to our system,
Click on your Web Browser (remember, you are not connecting via the
Internet -- this is a point-to-point connection).

In the URL Address enter http://10.225.224.2 and press ENTER.


SUBSEQUENT DIAL-UP NETWORK CONNECTIONS

Click "Connect".

If prompted for user name and password, complete according to local
procedures; otherwise, click "OK". When you receive "Connection Complete",
click "OK".

Click on your Web Browser (remember, you are not connecting via the
Internet).

In the URL Address enter http://10.225.224.2 and press ENTER.


FIRST TIME CONNECTION TO THE FIRE SYSTEM (If you have logged on
previously, skip to Subsequent Connections to the FIRE System.)

Click "Create New Account".

Fill out the registration form and click "Submit".

Enter your logon name (most users logon with their first and last
name).

Enter your password (the password is user assigned and must be 8
alpha/numerics, containing at least 1 uppercase, 1 lowercase and 1
numeric). FIRE will force you to change the password once a year.

Complete the online survey by choosing one of the options.

Click "Create".

If you receive the message "account created", click "OK".

Enter your 10 digit self-assigned PIN (Personal Identification Number)
and verify.

Click "Submit".

If you receive the message "Your PIN has been successfully created!",
click "OK".

Read the bulletin(s) and/or click "Start the FIRE application".


SUBSEQUENT CONNECTIONS TO THE FIRE SYSTEM

Click "Log On".

Enter your logon name (most users logon with their first and last
name).

Enter your password (the password is user assigned and is case
sensitive).


At Menu Options:

Click "Information Returns"

Enter your TCC:

Enter your EIN:

Click "Submit".

The system will then display the company name, address, city, state,
ZIP code and phone number. This information will be used to contact or
send any correspondence regarding this transmission. Update as appropriate
and/or Click "Accept".

Click one of the following:

Original File

Correction File

Test File

Replacement File (if you select this option, select one of the
following):

FIRE Replacement (file was originally transmitted on this system)

Click file to be replaced


MAGNETIC MEDIA REPLACEMENT FILE

Enter the alpha character from Form 9267, Media Tracking Slip, that was
sent with the request for replacement file.

Click "Submit".

Enter your 10 digit PIN.

Click "Submit".

Enter the drive/path/filename of the file you want to upload or click
"Browse" to locate the file.

Click "Upload".

When the upload is complete, the screen will display the total bytes
received and tell you the name of the file you just uploaded.

If you have more files to upload for that TCC:

Click "File Another?"; otherwise,

Click "Main Menu".

It is your responsibility to check the acceptability of your file;
therefore, be sure to dial back into the system in 1-2 business days.

At the Main Menu:

Click "File Stats".

Enter your TCC:

Enter your EIN:

Click "Search".


If "Results" indicate:

"Good, Not Released" and you agree with the "Count of Payees", you are
finished with this file. The file will automatically be released in 10
calendar days unless you contact us within this timeframe.

"File Released" -- File has been released to our mainline processing.

"File Bad" -- Correct the errors and timely resubmit the file as a
"replacement".

"Not Yet Processed" -- File has been received, but we do not have
results available yet. Please check back in a few days.

Click on the desired file for a detailed report of your transmission.

When you are finished, click on Main Menu.

Click "Logoff".

Close your Web Browser.


IMPORTANT

Go back into your Dial-Up Network and click "hang-up"; otherwise, you
may stay connected and incur unnecessary phone charges.


SEC. 9. COMMUNICATIONS SOFTWARE SPECIFICATIONS (TEXT INTERFACE)

.01 Communications software settings must be:

-- No parity

-- Eight data bits

-- One stop bit


.02 Terminal Emulation must be VT100.

.03 Before dialing have your TCC and EIN available.

.04 Due to the large number of communication products available, it is
impossible to provide specific information on all software/hardware
configurations. However, since most filers use Windows 95, 98, NT, 2000 or
ME software (more current versions are similar), the following
instructions are geared toward those products:

TEXT INTERFACE

Select Programs

Accessories

Communications (Windows 98, NT, 2000)

Hyperterminal

The first time you log on, select Hyperterminal, Hyperterm or
Hyperterm.exe, whichever is available on your system. Thereafter, you can
just select the icon that you have saved.

A box will appear titled "Connection Description".

Enter a name and choose an icon for the connection:

Country Code: United States of America

Area Code: 304

Phone Number: 262-2400


Connect Using: (default)

(If you need to modify the phone number, select File, then Properties
to enter defaults for the area code, phone numbers and/or special access
codes.)

Click on "Dial."

A "Connect" box will appear to show the status.

Once you have connected to The FIRE System, if you do not get a menu
within a few seconds, press the ENTER key one time.

Press "1" to connect to the system.

Read the Information notice and/or press ENTER to continue.


FIRST TIME LOGON

When you have connected to the system, enter "new" to create your logon
name and password.

Complete the registration information and enter "y" to create account.


LOGON NAME AND PASSWORD

Logon Name: Enter a logon name. Most users enter their first and last
name as the logon name.

Password: Enter a password (the password is user assigned and must be 8
alpha/numerics, containing at least 1 uppercase, 1 lowercase and 1
numeric). FIRE will force you to change the password once a year.

After entering the password and completing the survey, press ENTER.

Enter your 10 digit self-assigned PIN (Personal Identification Number)
and verify. Enter "y" to create the PIN. If successful, you will receive a
message that the PIN creation has been completed. Press ENTER.

Read the information notice and/or press ENTER.


TRANSFERRING YOUR ELECTRONIC FILE

From the Main Menu,

Enter "A" for Electronic Filing.

Enter "A" for Forms 1098, 1099, 5498, W-2G, 1042-S, 8027 and
Questionable Forms W-4.

Press the Tab key to advance to TCC box; otherwise, enter "E" to exit.

Enter your TCC:

Enter your EIN:

The system will then display the company name, address, city, state, ZIP
code and phone number. This information will be used to contact or send
correspondence (if necessary) regarding this transmission. If you need to
update, enter "n" to correct; otherwise, enter "y" to accept.

Select one of the following:

"A" for an Original file

"B" for a Replacement file

"C" for a Correction file

"D" for a Test file


If you selected "B" for a replacement file, select one of the
following:

"A" Replacement Files For This System

This option is to replace an original/correction file that was
submitted electronically on this system but was bad and needs to be
replaced. Select the file to be replaced.

"B" Magnetic media replacement files

Enter the alpha character from Form 9267, Media Tracking Slip, that was
sent with the request for replacement file.

Press ENTER to continue or "e" to exit.

Enter your 10 digit PIN and press ENTER.

Choose one of the following protocols (Hyperterminal is normally set to
Zmodem by default):

X -- Xmodem

Y -- Ymodem

Z -- Zmodem (Zmodem will normally give you the fastest transfer rate.)

At this point, you must start the upload from your PC.

To send a file:

Go to the hyperterminal menu bar.

Click on Transfer.

Click on Send file. (Be sure the protocol selected matches the protocol
selected earlier. If Zmodem was selected, set to Zmodem not Zmodem with
crash recovery.)

A box will appear titled "Send File".

Enter the drive/path/filename or click on Browse to locate your file.

Click on Send.


When the upload is complete, the screen will display the total bytes
received and the name IRS assigned to your file.

Press ENTER to continue.

If you have more files to send for the same TCC/EIN, enter "y";
otherwise, enter "n".

It is your responsibility to check the acceptability of your file;
therefore, be sure to dial back into the system in 1-2 business days.

At the Main Menu:

Enter "B" for file status.

Press the Tab key to advance to TCC box; otherwise, enter "E" to exit.

Enter your TCC:

Enter your EIN:

Enter "B" for the current year file results.

Tab to the appropriate file and press ENTER.

If "Results" indicate:

"Good, Not Released" and you agree with the "Count of Payees", you are
finished with this file. The file will automatically be released in 10
calendar days unless you contact us within this timeframe.

"File Released" -- File has been released to our mainline processing.

"File Bad" -- Correct the errors and timely resubmit the file as a
replacement.

"Not Yet Processed" -- File has been received, but we do not have
results available yet. Please check back in a few days.

When you are finished, enter "E" from the Main Menu to logoff.

Enter "2" to hang-up.


SEC. 10. MODEM CONFIGURATION

.01 Hardware features

(a) Enable hardware flow control

(b) Enable modem error control

(c) Enable modem compression


SEC. 11. COMMON PROBLEMS AND QUESTIONS ASSOCIATED WITH ELECTRONIC
FILING

.01 Refer to Part A, Sec. 16, for common format errors associated with
electronic/magnetic files.

.02 The following are the major non-format errors associated with
electronic filing:

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

The results of your file transfer are posted to the FIRE System within
two business days. It is your responsibility to verify file acceptability
and, if the file contains errors, you can get an online listing of the
errors. Date received and number of payee records are also displayed. If
the file is good, but you do not want the file processed, you must contact
IRS/MCC within 10 days from the transmission of your file.

2. Incorrect file is not replaced timely.

If your file is bad, correct the file and timely resubmit as a
replacement.

3. Transmitter compresses several files into one.

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

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

Once a file has been transmitted, you cannot send a replacement file
unless File Status indicates the file is bad (1-2 business days after file
was transmitted). If you do not want us to process the file, you must
first contact us toll-free at 1-866-455-7438 to see if this is a
possibility.

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

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

6. File is formatted as EBCDIC.

All files submitted electronically must be in standard ASCII code.

7. Transmitter has one TCC number, but is filing for multiple
companies, which EIN should be used when logging into the system to send
the file?

When sending the file electronically, you will need to enter the EIN of
the company assigned to the TCC. When you upload the file, it will contain
the EIN's for the companies, for whom you are filing. This information
will be passed forward.

8. Transmitter sent the wrong file, what should be done?

Call us as soon as possible toll-free at 1-866-455-7438, ext. 3. We may
be able to stop the file before it has been processed. Please do not send
a replacement for a file that is marked as a good file.


.03 The following are the most common problems encountered when
connecting with dial-up networking/web browser:

1. Transmitter is unable to connect to the FIRE System using dial-up
networking.

* The user name and password should be blank when trying to connect
unless it is needed by your system.

* Windows 95/98: Disable "enable software compression"

* Windows NT/2000: Disable both "enable software compression" and
"enable PPP/LCP extensions"

* TCP/IP should be the only network protocol that is enabled.

(Make sure you are using analog lines rather than digital.)


2. Transmitter is connecting using dial-up networking, but is unable to
bring up the URL address using the web browser.

* Proxy server should be disabled for a dial-up connection.

* "Using a modem" option should be selected.

* The home page should either display http://10.225.224.2 or be set to
"about:blank".

* The security level should be set at medium.

* The option "enable software compression" should be disabled under
Dial-Up Networking.


3. Transmitter clicks on "start the fire application", but the logon
screen is displayed again.

Your browser must be set to receive "cookies".

4. Transmitter is getting a menu when connecting with dial-up
networking.

The option "pop-up a terminal window" should be disabled.

5. Transmitter cannot find the browse button to upload file.

If using Internet Explorer, you must have version 4.0 or higher. If
using Netscape Navigator, it must be version 2.0 or higher.

6. The line is busy when dialed.

We have enough lines available that you should not get this message.
Check the phone number being dialed. It should be 304-262-2400. If you
need a number such as an 8 or a 9 to access an outside line, make sure it
is present. Also, some companies require an access code for long distance
dialing.

7. I am receiving the error message "Remote PPP Peer Not Responding" or
receiving a 718 error with Windows 2000 or XP.

Disable "enable LCP Extensions" in Dial-Up Networking. (This is located
in Dial-up Networking Properties, Networking, and Settings.)


.04 The following are the most common problems encountered when
connecting with hyperterminal.


1. Transmitter is unable to connect using hyperterminal.

* If you need a number such as an 8 or a 9 to access an outside line,
make sure it is present.

* Set the terminal emulation to VT100.

* Try lowering the modem speed.

* Turn the modem off and then back on to reset it.


(Make sure you are using analog lines rather than digital.)

2. Transmitter is getting the message "annex command line interpreter".

Disconnect and try again. You may need to lower the modem speed if this
happens several times in a row.

3. When trying to logon, the cursor is not in the correct box, or the
menus are distorted.

The terminal emulation must be set to VT100. Also, verify that the data
bits are set at 8, the stop bit is set at 1 and parity is set at None.

4. Transmitter was able to connect and the menu is displayed, but is
unable to type anything.

Scroll lock cannot be turned on.

5. When transmitter connects, the menus keep scrolling and display
garbage characters.

Make sure "Use error control" and "Compress data" are enabled under the
Advanced Connection Settings.

6. Transmitter receives message "bad data packet" when the file is
transmitting. What does this mean?

Your modem is having problems sending the data, so it is trying to
resubmit it. Normally, if the transfer does not abort, the file will be
sent successfully.


PART C. MAGNETIC MEDIA SPECIFICATIONS

.01 Transmitters should be consistent in the use of recording codes and
density on files. If the media does not meet these specifications, IRS/MCC
will request a replacement file. Filers are encouraged to submit a test
prior to submitting the actual file. Contact IRS/MCC for further
information toll-free at 1-866-455-7438. Transmitters should also check
media for viruses before submitting it to IRS/MCC.


SEC. 1. TAPE CARTRIDGE SPECIFICATIONS

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

(a) Must be IBM 3480, 3490, 3490E, 3590, 3590E or AS400 compatible.

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

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

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

(3) Cartridges must be 18-track, 36-track, 128-track or 256-track
parallel (See Note).

(4) Cartridges will contain 37,871 CPI, 75,742 CPI, or 3590 CPI
(characters per inch).

(5) Mode will be full function.

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

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


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

(a) A block must not exceed 32,250 tape positions.

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

(c) All records, except the header and trailer labels, may be blocked
or unblocked. A record may not contain any control fields or block
descriptor fields which describe the length of the block or the logical
records within the block. The number of logical records within a block
(the blocking factor) must be constant in every block with the exception
of the last block which may be shorter (see item (b) above). The block
length must be evenly divisible by 750.

(d) Records may not span blocks.


.03 Tape cartridges may be labeled or unlabeled.

.04 For the purposes of this Revenue Procedure, the following must be
used: Tape Mark:

(a) Signifies the physical end of the recording on tape.

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

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

Note: Filers should indicate on the external media label whether the
cartridge is 18-track, 36-track, 128-track or 256-track.


SEC. 2. 8mm, 4mm, AND QUARTER-INCH CARTRIDGE SPECIFICATIONS

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

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

(a) GENERAL

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

* Created from an AS400 operating system only.

* Mode will be full function.

* Compressed data is not acceptable.

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

* A file may consist of more than one cartridge; however, no more than
250,000 documents may be transmitted per file or per cartridge. The
filename, for example, IRSTAX, will contain a three digit extension. The
extension will indicate the sequence of the cartridge within the file
(e.g., 1 of 3, 2 of 3, and 3 of 3 will appear in the header label as
IRSTAX.001, IRSTAX.002, and IRSTAX.003 on each cartridge of the file). The
Transmitter "T" Record must only appear on the first cartridge. The End of
Transmission "F" Record should be placed only on the last cartridge for
files containing multiple cartridges.


(2) The tape cartridge records defined in this Revenue Procedure may be
blocked subject to the following:

* A block must not exceed 32,250 tape positions.

* If the use of blocked records would result in a short block, the last
block of the file may be filled with 9s or truncated.

* All records, except the header and trailer labels, may be blocked or
unblocked. A record may not contain any control fields or block descriptor
fields which describe the length of the block or the logical records
within the block. The number of logical records within a block (the
blocking factor) must be constant in every block with the exception of the
last block which may be shorter (see above). The block length must be
evenly divisible by 750.

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

* Extraneous data following the "F" Record will result in IRS/MCC
requesting a replacement file. Therefore, IRS/MCC encourages transmitters
to use a blank tape cartridge, rather than used cartridges, in the
preparation of data when submitting information returns.

* Records may not span blocks.

* No more than 250,000 documents per cartridge and per file.


(3) For faster processing, IRS/MCC encourages transmitters to use
header labeled cartridges. Filers should use IRSTAX as a filename.

(4) For the purposes of this Revenue Procedure, the following must be
used: Tape Mark:

* Signifies the physical end of the recording on tape.

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

* May follow the header label and precede and/or follow the trailer
label.


(5) IRS/MCC can only read one data file on a tape. A data file is a
group of records which may or may not begin with a tapemark, but must end
with a trailer label. Any data beyond the trailer label cannot be read by
IRS programs.


(b) 8mm cartridge specifications

(1) 8mm (.315-inch) tape cartridges will be 21/2-inch by 33/4-inch.

(2) These are the only 8mm tape cartridges IRS/MCC can accept:

Tracks Density Capacity
------ ------- --------
1 20 (43245 BPI) 2.3 Gb
1 21 (45434 BPI) 5 Gb


Note: Advanced Metal Evaporated (AME) cartridges are not acceptable.


(c) 4mm cartridge specifications

(1) 4mm (.157-inch) cartridges will be 21/4-inch by 3-inch.

(2) These are the only 4mm cartridges IRS/MCC can accept:

Tracks Density Capacity
------ ------- --------
1 19 (61000 BPI) 1.3 Gb (60 meter) DDS
1 19 (61000 BPI) 2 Gb (90 meter) DDS
1 19 (61000 BPI) 4 Gb (120 meter) DDS-2


(d) Quarter-Inch Cartridges (QIC) (1/4-inch) specifications

(1) QIC cartridges will be 4" by 6".

(2) These are the only QIC cartridges IRS/MCC accepts:

Size Tracks Density Capacity
---- ------ ------- --------
QIC-24 8/9 5 (8000 BPI) 45Mb or 60Mb
QIC-120 15 15 (10000 BPI) 120Mb or 200Mb
QIC-150 18 16 (10000 BPI) 150Mb or 250Mb
QIC-525 26 17 (16000 BPI) 525Mb
QIC-1000 30 21 (36000 BPI) 1Gb
QIC-2Gb 42 34 (40640 BPI) 2Gb


.02 IRS/MCC strongly recommends filers using 8mm, 4mm or Quarter-Inch
cartridges send in test media. (See Part A, Sec. 7).


SEC. 3. 31/2-INCH DISKETTE SPECIFICATIONS

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

(a) 31/2-inches in diameter.

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

(c) Records must be a fixed length of 750 bytes per record.

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

(e) Positions 749 and 750 of each record have been reserved for use as
carriage return/line feed (cr/lf) characters, if applicable.

(f) Filename of IRSTAX must be used. Do not enter any other data in
this field. If a file will consist of more than one diskette, the filename
IRSTAX will contain a three-digit extension. This extension will indicate
the sequence of the diskettes within the file. For example, if the file
consists of three diskettes, the first diskette will be named IRSTAX.001,
the second will be IRSTAX.002, and the third will be IRSTAX.003. The first
diskette, IRSTAX.001 will begin with a "T" Record and the third diskette,
IRSTAX.003 will have an "F" Record at the end of the file.

(g) A diskette cannot contain multiple files. A file can have only ONE
Transmitter "T" Record.

(h) Failure to comply with instructions will result in IRS/MCC
requesting a replacement file.

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

Capacity Tracks Sides/Density Sector Size
-------- ------ ------------- -----------
1.44 mb 96tpi hd 512
1.44 mb 135tpi hd 512


.02 IRS/MCC encourages transmitters to use blank or currently formatted
diskettes when preparing files. If extraneous data follows the End of
Transmission "F" Record, IRS/MCC will request a replacement file.

.03 IRS/MCC will only accept 31/2-inch diskettes created using MS-DOS.

.04 31/2-inch diskettes created on a System 36 or iSeries(AS400) are
not acceptable.

.05 Compressed data is not acceptable.


PART D. RECORD FORMAT SPECIFICATIONS AND RECORD LAYOUTS

SEC. 1. GENERAL

.01 The specifications contained in this part of the Revenue Procedure
define the required formation and contents of the records to be included
in the electronic or magnetic media files.

.02 A provision is made in the "B" Records for entries which are
optional. If the field is not used, enter blanks to maintain a fixed
record length of 750 positions. Each field description explains the
intended use of specific field positions.


SEC. 2. TRANSMITTER "T" RECORD -- GENERAL FIELD DESCRIPTIONS

.01 The Transmitter "T" Record identifies the entity transmitting the
electronic/magnetic media file and contains information which is critical
if it is necessary for IRS/MCC to contact the filer.

.02 The Transmitter "T" Record is the first record on each file and is
followed by a Payer "A" Record. A file format diagram is located at the
end of Part D. A replacement file will be requested by IRS/MCC if the "T"
Record is not present. For transmitters with multiple diskettes, refer to
Part C, Sec. 3, 31/2-Inch Diskette Specifications.

.03 For all fields marked "Required", the transmitter must provide the
information described under Description and Remarks. For those fields not
marked "Required", a transmitter must allow for the field, but may be
instructed to enter blanks or zeros in the indicated field positions and
for the indicated length.

.04 All records must be a fixed length of 750 positions.

.05 All alpha characters entered in the "T" Record must be upper-case,
except email addresses which may be case sensitive. Do not use punctuation
in the name and address fields.


[Record Name: Transmitter "T" Record omitted -- Kleinrock Publishing]


SEC. 3. TRANSMITTER "T" RECORD -- RECORD LAYOUT

[Transmitter "T" Record -- Record Layout omitted -- Kleinrock Publishing]


SEC. 4. PAYER "A" RECORD -- GENERAL FIELD DESCRIPTIONS

.01 The Payer "A" Record identifies the person making payments, a
recipient of mortgage or student loan interest payments, an educational
institution, a broker, a person reporting a real estate transaction, a
barter exchange, a creditor, a trustee or issuer of any IRA or MSA plan,
and a lender who acquires an interest in secured property or who has a
reason to know that the property has been abandoned. The payer will be
held responsible for the completeness, accuracy, and timely submission of
electronic/magnetic files.

.02 The second record on the file must be an "A" Record. A transmitter
may include Payee "B" Records for more than one payer in a file. However,
each group of "B" Records must be preceded by an "A" Record and followed
by an End of Payer "C" Record. A single file may contain different types
of returns but the types of returns must not be intermingled. A separate
"A" Record is required for each payer and each type of return being
reported.

.03 The number of "A" Records depends on the number of payers and the
different types of returns being reported. Do not submit separate "A"
Records for each payment amount being reported. For example, if a payer is
filing Form 1099-DIV to report Amount Codes 1, 2 and 3, all three amount
codes should be reported under one "A" Record, not three separate "A"
Records.

.04 The maximum number of "A" Records allowed on a file is 90,000.

.05 All records must be a fixed length of 750 positions.

.06 All alpha characters entered in the "A" Record must be upper-case.

.07 For all fields marked "Required", the transmitter must provide the
information described under Description and Remarks. For those fields not
marked "Required", a transmitter must allow for the field, but may be
instructed to enter blanks or zeros in the indicated media position(s) and
for the indicated length.


[Record Name: Payer"A" Record omitted -- Kleinrock Publishing]


SEC. 5. PAYER "A" RECORD -- RECORD LAYOUT

[Payer "A" Record -- Record Layout omitted -- Kleinrock Publishing]


SEC. 6. PAYEE "B" RECORD -- GENERAL FIELD DESCRIPTIONS AND RECORD
LAYOUTS

.01 The "B" Record contains the payment information from the
information returns. The record layout for field positions 1 through 543
is the same for all types of returns. Field positions 544 through 750 vary
for each type of return to accommodate special fields for individual
forms. In the "B" Record, the filer must allow for all twelve Payment
Amount Fields. For those fields not used, enter "0s" (zeros).

.02 The following specifications include a field in the payee records
called "Name Control" in which the first four characters of the payee's
surname are to be entered by the filer;

(a) If filers are unable to determine the first four characters of the
surname, the Name Control Field may be left blank. Compliance with the
following will facilitate IRS computer programs in identifying the correct
name control:

(1) The surname of the payee whose TIN is shown in the "B" Record
should always appear first. If, however, the records have been developed
using the first name first, the filer must leave a blank space between the
first and last names.

(2) In the case of multiple payees, only the surname of the payee whose
TIN (SSN, EIN, ITIN, or ATIN) is shown in the "B" Record must be present
in the First Payee Name Line. Surnames of any other payees may be entered
in the Second Payee Name Line.


.03 For all fields marked "Required", the transmitter must provide the
information described under "Description and Remarks". For those fields
not marked "Required", the transmitter must allow for the field, but may
be instructed to enter blanks or zeros in the indicated field position(s)
and for the indicated length.

.04 All records must be a fixed length of 750 positions.

.05 A field is also provided in these specifications for Special Data
Entries. This field may be used to record information required by state or
local governments, or for the personal use of the filer. IRS does not use
the data provided in the Special Data Entries Field; therefore, the IRS
program does not check the content or format of the data entered in this
field. It is the filer's option to use the Special Data Entry Field.

.06 Following the Special Data Entries Field in the "B" Record, payment
fields have been allocated for State Income Tax Withheld and Local Income
Tax Withheld. These fields are for the convenience of the filers. The
information will not be used by IRS/ MCC.

.07 Those payers participating in the Combined Federal/State Filing
Program must adhere to all of the specifications in Part A, Sec. 13, to
participate in this program.

.08 All alpha characters in the "B" Record must be uppercase.

.09 Do not use decimal points (.) to indicate dollars and cents.
Payment Amount Fields must be all numerics.



[Record Name: Payer "B" Record and Standard Payee "B" Record Format For
All Types of Returns, Positions 1-543 omitted -- Kleinrock Publishing]


The following sections define the field positions for the different types
of returns in the Payee "B" Record (positions 544-750):

(1) Form 1098

(2) Form 1098-E

(3) Form 1098-T

(4) Form 1099-A

(5) Form 1099-B

(6) Form 1099-C

(7) Form 1099-DIV <*>

(8) Form 1099-G <*>

(9) Form 1099-INT <*>

(10) Form 1099-LTC

(11) Form 1099-MISC <*>

(12) Form 1099-MSA

(13) Form 1099-OID <*>

(14) Form 1099-PATR <*>

(15) Form 1099-Q

(16) Form 1099-R <*>

(17) Form 1099-S

(18) Form 5498 <*>

(19) Form 5498-MSA

(20) Form W-2G

----------
*/ These forms may be filed through the Combined Federal/State Filing
Program. IRS/MCC will forward these records to participating states for
filers who have been approved for the program. See Part A, Sec. 13, for
information about the program, including specific codes for the record
layouts.


[Payee "B" Record -- Record Layout Positions 544-750 for Form 1098, Form
1098-E, Form 1098-T, Form 1099-A, Form 1099-B, Form 1099-C, Form 1099-DIV,
Form 1099-G, Form 1099-INT, Form 1099-LTC, Form 1099-MISC, Form 1099-MSA,
Form 1099-OID, Form 1099-PATR, Form 1099-Q, Form 1099-R, Form 1099-S, Form
5498, Form 5498 MSA and Form W-2G omitted -- Kleinrock Publishing]


SEC. 7. END OF PAYER "C" RECORD -- GENERAL FIELD DESCRIPTIONS AND
RECORD LAYOUT

.01 The "C" Record consists of the total number of payees and the
totals of the payment amount fields filed for each payer and/or particular
type of return. The "C" Record must follow the last "B" Record for each
type of return for each payer.

.02 For each "A" Record and group of "B" Records on the file, there
must be a corresponding "C" Record.

.03 The End of Payer "C" Record is a fixed length of 750 positions. The
control fields are each 18 positions in length.


[Record Name: End of Payer "C" Record and Record Layout omitted --
Kleinrock Publishing]


SEC. 8. STATE TOTALS "K" RECORD -- GENERAL FIELD DESCRIPTIONS AND
RECORD LAYOUT

.01 The State Totals "K" Record is a summary for a given payer and a
given state in the Combined Federal/State Filing Program, used only when
state reporting approval has been granted.

.02 The "K" Record will contain the total number of payees and the
total of the payment amount fields filed by a given payer for a given
state. The "K" Record(s) must be written after the "C" Record for the
related "A" Record. A file format diagram is located at the end of Part D.

.03 The "K" Record is a fixed length of 750 positions. The control
total fields are each 18 positions in length.

.04 In developing the "K" Record, for example, if a payer used Amount
Codes 1, 3, and 6 in the "A" Record, the totals from the "B" Records coded
for this state would appear in Control Totals 1, 3, and 6 of the "K"
Record.

.05 There must be a separate "K" Record for each state being reported.

.06 Refer to Part A, Sec. 13, for the requirements and conditions that
must be met to file via this program.


[State Totals "K" Record -- Record Layout Forms 1099-DIV, 1099-G,
1099-INT, 1099-MISC, 1099-OID, 1099-PATR, 1099-R, and 5498 omitted --
Kleinrock Publishing]


SEC. 9. END OF TRANSMISSION "F" RECORD -- GENERAL FIELD DESCRIPTIONS
AND RECORD LAYOUT

.01 The End of Transmission "F" Record is a summary of the number of
payers in the entire file.

.02 The "F" Record is a fixed record length of 750 positions.

.03 This record must be written after the last "C" Record (or last "K"
Record, when applicable) of the entire file.


[Record Name: End of Transmission "F" Record omitted -- Kleinrock
Publishing]


SEC. 10. FILE LAYOUT DIAGRAM

FILE FORMAT

Each record must be 750 positions.

T Record -- Identifies the Transmitter of magnetic/electronic file &
information contained on Forms 4419 & 4804.

A Record -- Identifies the Payer (the Institution or person making
payments) the type of document being reported, & other misc. info.

B Record -- Identifies the Payee, the specific payment amounts and info
pertinent to that form.

C Record -- Summary of B records for the payees and money amounts by
payer and type of return.

K Record -- Summary of State(s) Totals (for Combined Federal/State
files). Each state will have a separate K record.

F Record -- End of Transmission.


PART E. EXTENSIONS OF TIME AND WAIVERS

SEC. 1. GENERAL -- EXTENSIONS

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

.02 Form 8809, Request for Extension of Time To File Information
Returns, should be submitted to IRS/MCC at the address listed in .08 of
this section. This form may be used to request an extension of time to
file information returns submitted on paper, electronically, or
magnetically to the IRS. Use a separate Form 8809 for each method of
filing information returns you intend to use, i.e. electronically and/or
magnetically.

.03 To be considered, an extension request must be postmarked or
transmitted by the due date of the returns; otherwise, the request will be
denied. (See Part A, Sec. 9, for due dates.) If requesting an extension of
time to file several types of forms, use one Form 8809; however, the Form
8809 or file must be postmarked no later than the earliest due date. For
example, if requesting an extension of time to file both Forms 1099-INT
and 5498, submit Form 8809 on or before February 28, 2003. (See Note.)

Note: For Tax Year 2002, if you will be filing Forms 1098, 1099, or W-2G
electronically, the Form 8809 is not required unless an extension is
needed beyond March 31, 2003.

.04 As soon as it is apparent that a 30-day extension of time to file
is needed, an extension request should be submitted. It will take a
minimum of 30 days for IRS/MCC to respond to an extension request.
Generally, IRS/MCC does not begin processing extension requests until
January. Extension requests received prior to January are input on a first
come, first serve basis.

.05 Under certain circumstances, a request for an extension of time
could be denied. When a denial letter is received, any additional or
necessary information may be resubmitted within 20 days.

.06 Requesting an extension of time for multiple payers (50 or less)
may be done by submitting Form 8809 and attaching a list of the payer
names and associated TINs (EIN or SSN). The listing must be attached to
ensure an extension is recorded for all payers. Form 8809 may be
computer-generated or photocopied. Be sure that all the pertinent
information is included.

.07 Requests for an extension of time to file for more than 50 payers
are required to be submitted electronically or magnetically. IRS
encourages requests for 10 to 50 payers to be filed electronically or
magnetically. (See Sec. 3, for the file format.) The request may be filed
electronically, on tape cartridges, 8mm, 4mm, Quarter-Inch Cartridges
(QIC), or 31/2-inch diskette.

.08 All requests for an extension of time filed on Form 8809 or
magnetic media should be sent using the following address:

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


Note: Due to the large volume of mail received by IRS/MCC and the time
factor involved in processing the Form 8809, it is imperative that the
attention line be present on all envelopes or packages containing
Extension of Time (EOT) requests.

.09 Requests for extensions of time to file postmarked by the United
States Postal Service on or before the due date of the returns, and
delivered by United States mail to the IRS/MCC after the due date, are
treated as timely under the "timely mailing as timely filing" rule. A
similar rule applies to designated private delivery services (PDSs). See
Part A, Sec. 9, for more information on PDSs. For requests delivered by a
designated PDS, but through a non-designated service, the actual date of
receipt by IRS/MCC will be used as the filing date.

.10 Transmitters requesting an extension of time for multiple payers
will receive one approval letter, accompanied by a list of payers covered
under that approval.

.11 If an additional extension of time is needed, a second Form 8809 or
file must be filed by the initial extended due date. Check line 7 on the
form to indicate that an additional extension is being requested. A second
30-day extension will be approved only in cases of extreme hardship or
catastrophic event. If requesting a second 30-day extension of time,
submit the information return files as soon as prepared. Do not wait for
MCC's response to your second extension request.

.12 If an extension request is approved, the approval letter should be
kept on file. The approval letter or copy of the approval letter for an
extension of time should not be sent to IRS/MCC with the magnetic media
file or to the service center where the paper returns are filed.

.13 Request an extension for only one tax year.

.14 The extension request must be signed by the payer or a person who
is duly authorized to sign a return, statement, or other document for the
payer.

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

.16 Form 8809 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. A copy of Form 8809 is also provided in the back of
Publication 1220.


SEC. 2. SPECIFICATIONS FOR ELECTRONIC FILING OR MAGNETIC MEDIA
EXTENSIONS OF TIME

.01 The specifications in Sec. 3 include the required 200-byte record
format for extensions of time to file requests submitted electronically or
magnetically. Also included are the instructions for the information that
is to be entered in the record. Filers are advised to read this section in
its entirety to ensure proper filing.

.02 If a filer does not have an IRS/MCC assigned Transmitter Control
Code (TCC), a Form 4419, Application for Filing Information Returns
Electronically/Magnetically, must be submitted to obtain a TCC. This
number must be used to submit an extension request
electronically/magnetically. (See Part A, Sec. 6.)

.03 For extension requests filed on magnetic media, the transmitter
must mail the completed, signed Form 8809, Request for Extension of Time
To File Information Returns, in the same package as the corresponding
media or fax it to 304-264-5602. For extension requests filed
electronically, the transmitter must fax the Form 8809 the same day the
transmission is made.

.04 Transmitters submitting an extension of time electronically or
magnetically should not submit a list of payer names and TINs with the
Form 8809 since this information is included on the electronic or magnetic
file. However, Line 6 of the Form 8809 must be completed with the total
number of records included on the electronic file or magnetic media.

.05 Do not submit Tax Year 2002 extensions of time to file requests on
magnetic media before January 1, 2003, or electronically before January 7,
2003.

.06 Each piece of magnetic media must have an external media label
containing the following information:

(a) Transmitter name

(b) Transmitter Control Code (TCC)

(c) Tax year

(d) The words "Extension of Time"

(e) Record count


.07 Electronic filing, tape cartridge, 8mm, 4mm, QIC, and 31/2-inch
diskette specifications for extensions are the same as the specifications
for filing of information returns. (See Part B or C for specific technical
information.)


SEC. 3. RECORD LAYOUT -- EXTENSION OF TIME

.01 Positions 6 through 185 of the following record should contain
information about the payer for whom the extension of time to file is
being requested. Do not enter transmitter information in these fields.
Only one TCC may be present in a file.


[Record Layout for Extension of Time omitted -- Kleinrock Publishing]


SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS

.01 Request an extension of time to furnish the statements to
recipients of Forms 1098, 1099, 5498, W-2G, W-2 series, and 1042-S by
submitting a letter to IRS/MCC at the address listed in Part E, Sec. 1.08.
The letter should contain the following information:

(a) Payer name

(b) TIN

(c) Address

(d) Type of return

(e) Specify that the extension request is to provide statements to
recipients

(f) Reason for delay

(g) Signature of payer or duly authorized person


.02 Requests for an extension of time to furnish the statements to
recipients for Forms 1098, 1099, 5498, W-2G, W-2 series, and 1042-S are
not automatically approved; however, if approved, generally an extension
will allow a maximum of 30 additional days from the due date to furnish
the statements to the recipients. The request must be postmarked by the
date on which the statements are due to the recipients.

.03 Generally, only the payer may sign the letter requesting the
extension for recipient copies. A transmitter may sign if given power of
attorney; however, a letter signed by the payer stating this fact must be
attached to the extension request letter. A transmitter must submit a
separate extension request letter for each payer. Do not submit a list of
payers.


SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS
ON MAGNETIC MEDIA

.01 If a payer is required to file on magnetic media but fails to do so
(or fails to file electronically in lieu of magnetic media filing) and
does not have an approved waiver on record, the payer will be subject to a
penalty of $50 per return in excess of 250. (For penalty information,
refer to the Penalty Section of the 2002 General Instructions for Forms
1099, 1098, 5498, and W-2G.)

.02 If payers are required to file original or corrected returns on
magnetic media, but such filing would create a hardship, they may request
a waiver from these filing requirements by submitting Form 8508, Request
for Waiver From Filing Information Returns on Magnetic Media, to IRS/MCC.
A Form 8508 can be obtained on the IRS Web Site at www.irs.gov or by
calling toll-free 1-800-829-3676.

.03 Even though a payer may submit as many as 249 corrections on paper,
IRS encourages electronic or magnetic filing of corrections. Once the 250
threshold has been met, filers are required to submit any returns of 250
or more electronically or magnetically. However, if a waiver for original
documents is approved, any corrections for the same type of returns will
be covered under this waiver.

.04 Generally, only the payer may sign the Form 8508. A transmitter may
sign if given power of attorney; however, a letter signed by the payer
stating this fact must be attached to the Form 8508.

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

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

.07 The waiver, if approved, will provide exemption from the magnetic
media filing requirement for the current tax year only. Payers may not
apply for a waiver for more than one tax year at a time; application must
be made each year a waiver is necessary.

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

.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45
days before the due date of the returns. Generally, IRS/ MCC does not
process waiver requests until January. Waiver requests received prior to
January are processed on a first come, first serve basis.

.10 All requests for a waiver should be sent using the following
address:

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


.11 File Form 8508 for the W-2 series of forms with IRS/MCC not SSA.

.12 Waivers are evaluated on a case-by-case basis and are approved or
denied based on criteria set forth in the regulations under Section
6011(e) of the Internal Revenue Code. The transmitter must allow a minimum
of 30 days for IRS/MCC to respond to a waiver request.

.13 If a waiver request is approved, the transmitter should keep the
approval letter on file. The transmitter should not send a copy of the
approved waiver to the service center where the paper returns are filed.

.14 An approved waiver from filing information returns on magnetic
media does not provide exemption from all filing. The payer must timely
file information returns on Copy A of acceptable paper forms with the
appropriate service center.

<<END RULING>>


 

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