misguidance in the proposed 6694 regulations

The following language appears in section 1.6694(b) of the proposed regulations:

The analysis prescribed by §1.6662-4(d)(3)(ii) (or any successor provision) for purposes of determining whether substantial authority is present applies for purposes of determining whether the more likely than not standard is satisfied. Whether a tax return preparer meets this standard will be determined based upon all facts and circumstances, including the tax return preparer's diligence. In determining the level of diligence in a particular situation, the tax return preparer's experience with the area of Federal tax law and familiarity with the taxpayer's affairs, as well as the complexity of the issues and facts, will be taken into account

The above language would be applicable to the "substantial authority" standard in lieu of the "more than likely standard" under 6649(a)(2)(A) as amended by the Emergenchy Economic Stabilization Act of 2008.

Focus instead on the fact that the tax return preparers will still need to meet the "substantial authority" itemized in 1.6662-3(d)(3)(iii) as well as the "analysis" requirements of (d)(3)(ii). Those are serious technical requirements and standards at a very high technical threshold.

So what is this "facts & circumstances" "familiarity with family" and "due diligence" language and focus on "complexity?" Those are trap terms. If you do not have the requisite technical support, you will be a 6694 penalty victim. In the real world, the IRS examiners are going to take aggressive positions that your technical authority is deficient if it is not entirely comprehensive. On many occasions I find that the IRS examiners do not know or understand the relevant law. Getting them to understand current law is sometimes a miricle. The examiners are not tax attorneys good at technical nuances sufficient to evaluate "due diligence" "complexity" and "facts & circumstances." If the technical support is lacking, I would not expect the examiners to know when the return preparer is more than 40% or more than 30% on target with technical authority, or take into account complexity, or lack of experience as a return preparer.

I believe the drafters of the proposed regulations should put these terms and concepts under "reasonable cause" in section 1.6694-2(d) of the proposed regulations. In fact "complexity" is a concept that is used in determing "reasonable cause" in the IRM dealing with penalties and also under the case law. The same is true of the "facts & circumstances" test and "due diligence." I would hope that the IRS will use that terminology solely for determining "reasonable cause" in the final regulations.

My problem with the location of these terms under the standard of conduct part of the regulations is because these terms are misleading to return preparers. These terms are traps because they imply that return preparers need not have quality technical support under section 1.6662-4(d) of the regulations.

Example 1: return preparer "negligence." Forget about it. There is no technical authority and the penalty will be applied. The fact that the law is complex or that you exercised due diligence will not negate the penalty. Bet on it.

Example 2: no return preparer negligence, but an "employee" was treated as a "subcontractor." I do not care how much "due diligence" was execised or even if you just had a heart by-pass operation, you will get nailed with the penalty. Your only concern will be whether the $5,000 "reckless" penalty will be assessed.

Do not rely on "due diligence" or "facts & circumstances" or "complexity" to save you from 6694 penalties when your technical support is weak or lacking. These terms are traps to blind-sided return preparers to take positions without doing the homework necessary to determine if the positions are supported with "substantial authority." Futther, assume that you will be dealing with incompetent IRS examiners with little training and experience because that is often the case.

We are almost at the end of 2008 there has been very little guidance to return preparers by their professional associations on the need for technical analysis and technical authority. My advice: more authority is better than less technical support and it is better to disclose positions to the IRS for the reduced standards. You will have to allocate more time to return preparation for tax research and consultations with tax experts.

I have received excellent commentary sent to ab@irstaxattorney.com. But you can make comment to these blogs. No seminars will be offered in December.

6695 signature requrements and penalty

This blog provides information on the 6695(b) failure to sign a return penalty and the IRS electronic signature procedures. Although this penalty has been largely ignored, it will be ignored no longer given the interest of the IRS in the 6694 penalties and the severity of those penalties. It is likely that the 6694(b) $5,000 penalty for reckless conduct will take into account the failure to sign a tax return. I have seen the IRS treat the failure to sign as one of the important facts taken into consideration in criminal fraud examinations of return preparers. Under the current 6694 regulations, you cannot avoid the 6694 penalty by not signing the tax return. If you have any issues on that point, please send an e-mail to ab@irstaxattorney.com

6695(b) FAILURE TO SIGN RETURN. --Any person who is a tax return preparer with respect to any return or claim for refund, who is required by regulations prescribed by the Secretary to sign such return or claim, and who fails to comply with such regulations with respect to such return or claim shall pay a penalty of $50 for such failure, unless it is shown that such failure is due to reasonable cause and not due to willful neglect. The maximum penalty imposed under this subsection on any person with respect to documents filed during any calendar year shall not exceed $25,000.



A tax return preparer who fails to sign a return or a refund claim before it is presented to the taxpayer for signature is subject to a $50 penalty for each such failure (Code Sec. 6695(b), as amended by the Small Business Tax Act of 2007 (P.L. 110-28) and Reg. §1.6695-1(b)). The regulations no longer require a manual signature. Return preparers may provide copies of returns for recordkeeping purposes without a manual signature, as long as the return copies are in an electronic or digital format prescribed by the IRS.

If more than one preparer is involved in the preparation of the return or claim for refund, the individual preparer with the primary responsibility for the overall accuracy of the preparation of the return or claim for refund must sign it, not another individual who may be responsible for its mathematical accuracy (Reg. §1.6695-1(b)(2)).

A substitute preparer may sign a return or refund claim when the original preparer is unavailable if the substitute preparer first reviews the information obtained by the original preparer and also reviews the original preparer's preparation of the return or refund claim (Reg. §1.6695-1(b)(1)).

The IRS is required to develop procedures for the acceptance of signatures in digital or other electronic form, effective July 22, 1998 (Code Sec. 6061(b)). Until such procedures are in place, the IRS is authorized to:
(1) waive the signature requirement for designated documents or returns; or

(2) provide for alternative signing methods.
Interim guidance regarding tax preparer signature requirement. Interim guidance has been issued for returns and claims for refund filed after December 31, 2007 identifying which returns and claims for refunds are required to be signed by a tax return preparer in order to avoid the Code Sec. 6695(b) penalty. The tax return preparer must sign the return or claim for refund after it is completed and before it is presented to the taxpayer for signature. If the preparer is unavailable to sign the return or claim another tax preparer must review its entire preparation and sign it before presenting it to the taxpayer. If more than one tax return preparer is involved with preparing the return or refund claim, the preparer having primary responsibility for its overall substantive accuracy must sign it (Notice 2008-12, I.R.B. 2008-3, December 31, 2007.

Tax identification numbers required. A tax return preparer who is required to sign a return or refund claim must also provide his or her tax identification number (TIN). The identifying number of an individual return preparer is the individual's social security number (Reg. §1.6109-2(a)). An individual tax return preparer can elect to use an alternative to the social security number as an identifying number. The alternative number will be prescribed by the IRS in forms, instructions or other guidance (Code Sec. 6109(a)(4), as amended by P.L. 110-28; see also ¶39,965.04). A $50 penalty is also imposed on a tax return preparer who fails to inscribe his or her TIN.

If the return preparer is employed or engaged by someone else to prepare the return or if the preparer is a member of a partnership of two or more preparers, the identifying number of the employer or partnership must also be entered on the return or claim for refund. Failure to provide an employer's identifying number may result in the imposition of a $50 penalty for each such failure (Code Sec. 6695(c), as amended by P.L. 110-28 and Reg. §1.6695-1(c)). Both penalties are excused where the failure is due to reasonable cause and not to willful neglect. The maximum penalty imposed on any person with respect to documents filed during any calendar year will not exceed $25,000 for each penalty (Code Sec. 6695(b) and (c), as amended by P.L. 110-28).


Signing of Individual Returns: Electronic signatures

The IRS Restructuring and Reform Act of 1998 (P.L. 105-206) requires the IRS to develop procedures for the acceptance of signatures in digital or other electronic form (Code Sec. 6061(b)). Until the procedures are in place, the IRS is authorized to: (1) waive the requirement of a signature for designated types or classes of returns, declarations, statements, or other documents or (2) provide for alternative methods of signing these items.

An alternative method of signature will be treated identically, for both civil and criminal purposes, as a signature on a paper form. The IRS must publish guidance to define and implement any signature waiver or alternative signature methods (Code Sec. 6061(b)(2) and Code Sec. 6061(b)(3)).

The IRS's e-file program allows taxpayers to file their returns electronically using an Authorized IRS e-file provider, a personal computer or, for those who are eligible, Free File. (The IRS announced that it would discontinue the TeleFile program (which allowed taxpayers to file their returns electronically using the telephone) after August 16, 2005 (Announcement 2005-26, 2005-1 CB 969)). Tax professionals accepted into the electronic filing program, called authorized IRS e-file Providers, are the electronic return originators (EROs) who transmit tax return information to the IRS. With respect to e-file signature alternatives, the Self-Select PIN Method allows individuals to electronically sign an e-file return by selecting a five-digit PIN. The Practitioner PIN Method is an e-file signature option for those who use an ERO. For more information on the IRS e-file program

The IRS will allow EROs to sign the following forms by rubber stamp, mechanical device (such as signature pen), or computer software program: Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return; Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350; and Form 8879, IRS e-file Signature Authorization, for any Form 8453, Form 8878, or Form 8879 filed on or after October 15, 2007 (Notice 2007-79. These alternative methods of signing authorized in Notice 2007-79 must include either a facsimile of the individual ERO's signature or of the ERO's printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. Notice 2007-79 applies only to EROs that sign Form 8453, Form 8878, or Form 8879, and does not alter the signature requirements for any other type of document currently required to be manually signed, such as elections, applications for changes in accounting method, powers of attorney, or consent forms. It also does not alter the requirement that Form 8453, Form 8878, or Form 8879 be signed by the taxpayer making these forms by handwritten signature or other authorized means (Notice 2007-79).



Notice 2008-12 , I.R.B. 2008-3, December 31, 2007.

Penalties: Failure by preparer to sign return. --


This notice provides guidance to the public regarding implementation of the tax return preparer signature requirement penalty provisions under section 6695(b) of the Internal Revenue Code, as amended by the Small Business and Work Opportunity Tax Act of 2007.



BACKGROUND

The Small Business and Work Opportunity Tax Act of 2007 (the Act), Pub. L. No. 110-28, 121 Stat. 190, was enacted on May 25, 2007. Section 8246 of the Act amended several provisions of the Code, including section 6695(b), to extend the application of the income tax return preparer penalties to all tax return preparers. As amended by the Act, section 6695(b) imposes a penalty on a tax return preparer of any return or claim for refund who fails to sign a return when required by regulations prescribed by the Secretary, unless it is shown that the failure is due to reasonable cause and not due to willful neglect. The penalty under section 6695(b) is $50 for each failure to sign, with a maximum of $25,000 per person imposed with respect to each calendar year. The amendments to section 6695(b) made by section 8246 of the Act are effective for tax returns and claims for refund prepared after May 25, 2007.



INTERIM AND PLANNED GUIDANCE

The Treasury Department and the Internal Revenue Service intend to issue regulations that implement the signature requirements under section 6695(b) for certain 2008 tax year returns and claims for refund. In advance of these regulations, guidance is being issued to (1) identify the returns and claims for refund required to be signed by a tax return preparer in order to avoid a section 6695(b) penalty under current regulations, and (2) identify the returns and claims for refund that will be required to be signed by a tax return preparer in order to avoid a section 6695(b) penalty under future regulations published by the Treasury Department and IRS. This interim guidance will apply until further guidance is issued and tax return preparers may rely on the interim guidance in this notice.



A. Signing Tax Return Preparer

For purposes of section 6695(b), an individual who is a tax return preparer with respect to a return of tax or claim for refund of tax listed below in paragraph (B)(1) of this notice shall sign the return or claim for refund after it is completed and before it is presented to the taxpayer (or nontaxable entity) for signature. If the tax return preparer is unavailable for signature, another tax return preparer shall review the entire preparation of the return or claim for refund, and then shall sign the return or claim for refund.

If more than one tax return preparer is involved in the preparation of the return or claim for refund, the individual tax return preparer who has the primary responsibility as between or among the preparers for the overall substantive accuracy of the preparation of such return or claim for refund shall be considered to be the tax return preparer for purposes of section 6695(b).



B. Forms Requiring Signature of Tax Return Preparer

(1) Consistent with existing regulations, in order to avoid the imposition of a penalty under section 6695(b), a signing tax return preparer described above in paragraph (A) of this notice must provide a signature on any income tax returns or claim for refund of income tax that are filed after December 31, 2007, including but not limited to the following:
 Form 990-T, Exempt Organization Business Income Tax Return

 Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation

 Form 1040, U.S. Individual Income Tax Return

 Form 1040A, U.S. Individual Income Tax Return

 Form 1040-C, U.S. Departing Alien Income Tax Return

 Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents

 Form 1040NR, U.S. Nonresident Alien Income Tax Return

 Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents

 Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona fide de Puerto Rico)

 Form 1040-SS, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico)

 Form 1040X, Amended U.S. Individual Income Tax Return

 Form 1041, U.S. Income Tax Return for Estates and Trusts

 Form 1041-N, U.S. Income Tax Return for Electing Alaska Native Settlement Trusts

 Form 1041-QFT, U.S. Income Tax Return for Qualified Funeral Trusts

 Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

 Form 1065, U.S. Return of Partnership Income

 Form 1065-B, U.S. Return of Income for Electing Large Partnerships

 Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return

 Form 1120, U.S. Corporation Income Tax Return

 Form 1120-C, U.S. Income Tax Return for Cooperative Associations

 Form 1120-F, U.S. Income Tax Return of a Foreign Corporation

 Form 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation

 Form 1120-H, U.S. Income Tax Return for Homeowners Associations

 Form 1120IC-DISC, Interest Charge Domestic International

 Sales Corporation Return

 Form 1120-L, U.S. Life Insurance Company Income Tax Return

 Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons

 Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return

 Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations

 Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts

 Form 1120-RIC, U.S. Income Tax Return For Regulated Investment Companies

 Form 1120S, U.S. Income Tax Return for an S Corporation

 Form 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B)

 Form 1120X, Amended U.S. Corporation Income Tax Return

 Form 2438, Undistributed Capital Gains Tax Return

(2) In the absence of Treasury regulations requiring signature, a signing tax return preparer described above in paragraph (A) of this notice will not be subject to the penalty under section 6695(b) with respect to tax returns or refund claims for taxes other than income taxes that are filed after December 31, 2007 but on or before December 31, 2008, including the filing of the following returns:
 Form CT-1, Employer's Annual Railroad Retirement Tax Return

 Form CT-2, Employee Representative's Quarterly Railroad Tax Return

 Form 11-C, Occupational Tax and Registration Return for Wagering

 Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return

 Form 706-A, United States Additional Estate Tax Return

 Form 706-D, United States Additional Estate Tax Return Under Code Section

 Form 706-GS(D), Generation-Skipping Transfer Tax Return For Distributions

 Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations

 Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return - Estate of nonresident not a citizen of the United States Trusts

 Form 706-QDT, United States Estate Tax Return for Qualified Domestic Trusts

 Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return

 Form 720, Quarterly Federal Excise Tax Return

 Form 720X, Amended Quarterly Federal Excise Tax Return

 Form 730, Monthly Tax Return for Wagers

 Form 843, Claim for Refund and Request for Abatement

 Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return

 Form 940-PR, Planilla para la Declaración Federal ANUAL del Patrono de la Contribución Federal para el Desempleo (FUTA)

 Form 941, Employer's QUARTERLY Federal Tax Return

 Form 941-PR, Planilla para la Declaración Federal TRIMESTRAL del Patrono

 Form 941-SS, Employer's QUARTERLY Federal Tax Return

 Form 941-M, Employer's MONTHLY Federal Tax Return

 Form 943, Employer's Annual Federal Tax Return for Agricultural Employees

 Form 943(PR), Planilla Para la Declaración ANUAL De La Contribución Del Patrono De Empleados Agrícolas

 Form 944, Employer's ANNUAL Federal Tax Return

 Form 944-PR, Planilla para la Declaración ANUAL de la Contribución Federal del Patrono 944(SP), Declaración Federal ANUAL de Impuestos del Patrono o Empleador

 Form 944-SS, Employer's ANNUAL Federal Tax Return

 Form 945, Annual Return of Withheld Federal Income Tax

 Form 1040 (Schedule H), Household Employment Taxes

 Form 1040-PR (Anexo H-PR), Contribuciones sobre el Empleo de Empleados Domesticos

 Form 2290, Heavy Highway Vehicle Use Tax Return

 Form 2290(FR), Declaration d'Impot sur L'utilisation des Vehicules Lourds sur les Routes

 Form 2290(SP), Declaración del Impuesto sobre el Uso de Vehículos Pesados en las Carreteras

 Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code

 Form 5330, Return of Excise Taxes Related to Employee Benefit Plans

 Form 8612, Return of Excise Tax on Undistributed Income of Real Estate Investment Trusts

 Form 8613, Return of Excise Tax on Undistributed Income of Regulated Investment Companies

 Form 8725, Excise Tax on Greenmail

 Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests

 Form 8849, Claim for Refund of Excise Taxes

 Form 8876, Excise Tax on Structured Settlement Factoring Transactions

 Form 8924, Excise Tax on Certain Transfers of Qualifying Geothermal or Mineral Interests

The tax return preparer shall sign the return in the manner prescribed by the Commissioner in forms, instructions, or other appropriate guidance.

The Treasury Department and IRS intend to issue regulations on or before December 31, 2008 requiring signatures under section 6695(b) for all the above listed forms that are filed after December 31, 2008.

Information on the preparer signature requirement for electronically filed returns will be announced in IRS publications, instructions, and information posted electronically on the IRS.gov website.



EFFECTIVE DATE

This Notice is effective as of January 1, 2008 .



CONTACT INFORMATION

The principal authors of this notice are Matthew S. Cooper and Michael E. Hara of the Office of the Associate Chief Counsel (Procedure and Administration). For further information regarding this notice contact Mr. Cooper at 202-622-4940 or Mr. Hara at (202) 622-4910 (not toll-free calls).


Notice 2007-79 , I.R.B. 2007-42, 809, October 15, 2007.

SECTION I. PURPOSE

This notice provides that the Internal Revenue Service will allow Electronic Return Originators (EROs) to sign the following forms by rubber stamp, mechanical device (such as signature pen), or computer software program: Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return; Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350; and Form 8879, IRS e-file Signature Authorization.



SECTION 2. BACKGROUND

Section 6061 of the Internal Revenue Code and Treas. Reg. §1.6061-1(a) generally provide that any tax return, statement, or other document shall be signed in accordance with forms, instructions, or regulations prescribed by the Secretary. Publication 1345, Handbook for Authorized IRS e-file Providers of Individual Income Tax Returns, sets forth the procedures for completing the Form 8453, Form 8878, and Form 8879. If providing the signature on a paper declaration, the taxpayer and the ERO (and the paid preparer if different from the ERO) must complete and sign the Form 8453 before the electronic data portion of the return is submitted. Taxpayers may wish to sign their returns electronically, but may choose to authorize their ERO to enter their Personal Identification Number (PIN) in the electronic return record by completing the appropriate IRS e-file signature authorization form. Form 8879 authorizes an ERO to enter PINs on Individual Income Tax Returns, and Form 8878 authorizes an ERO to enter PINs on Forms 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return; and Form 2350, Application for Extension of Time To File U.S. Income Tax Return.



SECTION 3. REQUIREMENTS FOR USE OF ALTERNATIVE METHODS OF SIGNING

The alternative methods of signing that this notice authorizes must include either a facsimile of the individual ERO's signature or of the ERO's printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension.

This notice applies only to EROs that sign Form 8453, Form 8878, or Form 8879, and does not alter the signature requirements for any other type of document currently required to be manually signed, such as elections, applications for changes in accounting method, powers of attorney, or consent forms. In addition, this notice does not alter the requirement that Form 8453, Form 8878, or Form 8879 be signed by the taxpayer making these forms by handwritten signature or other authorized means.



SECTION 4. EFFECTIVE DATE

This notice applies to any Form 8453, Form 8878, or Form 8879 filed on or after October 15, 2007.



SECTION 5. DRAFTING INFORMATION

The principal author of this notice is Michael E. Hara of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Michael E. Hara at (202) 622-4910 (not a toll-free call).



Rev. Proc. 2005-39 , I.R.B. 2005-28, 82, July 11, 2005.


SECTION 1. PURPOSE

This revenue procedure sets out the circumstances under which facsimile signatures may be used on (1) any form within the Form 94X series (including, but not limited to, Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return; Form 941, Employer's Quarterly Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; and Form 945, Annual Return of Withheld Federal Income Tax); (2) Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons; (3) Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips; (4) Form CT-1, Employer's Annual Railroad Retirement Tax Return; or (5) any variant of these forms ( e.g., Form 941c, Supporting Statement to Correct Information; Form 941-SS, Employer's Quarterly Federal Tax Return).



SECTION 2. BACKGROUND

Section 6061(a) of the Internal Revenue Code generally provides that any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations shall be signed in accordance with forms or regulations prescribed by the Secretary.

Section 6061(b) authorizes the Secretary to develop procedures for the acceptance of signatures in digital or other electronic form. Section 6061(b)(1)(B) provides that the Secretary may provide for alternative methods of signing returns, declarations, statements, or other documents. Section 6061(b)(2) provides that, notwith-standing any other provision of law, any return, declaration, statement, or other document signed under an approved alternative method will be treated for all purposes as an original signature.

Section 31.6061-1 of the Regulations on Employment Taxes and Collection of Income Tax at Source provides that employment tax returns must be signed by:

(a) the individual, if the person required to make the return is an individual;

(b) the president, vice president, or other principal officer, if the person required to make the return is a corporation;

(c) a responsible and duly authorized member or officer having knowledge of its affairs, if the person required to make the return is a partnership or other unincorporated organization; or

(d) the fiduciary, if the person required to make the return is a trust or estate.

Returns may also be signed for the taxpayer by a duly authorized agent in accordance with section 31.6011(a)-7 of the regulations.

Section 31.6011(a)-7 provides that an employment tax return may be made by an agent in the name of the person required to make the return if an acceptable power of attorney is filed with the Service and if the return includes all taxes required to be reported by such person on such return for the period covered by the return.

Section 301.6061-1(b) of the Regulations on Procedure and Administration provides that the Secretary may prescribe in forms, instructions, or other appropriate guidance, the method of signing any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations.



SECTION 3. SCOPE AND APPLICATION

Corporate officers or duly authorized agents may sign any of the following forms by facsimile ( i.e., by rubber stamp, mechanical device, or computer software program): (1) the Form 94X series; (2) Form 1042; (3) Form 8027; (4) Form CT-1; or (5) any variant of such designated form ( e.g., Form 941c; Form 941-SS). Officers or agents using a facsimile means of signature are personally responsible for ensuring that their facsimile signature is affixed to returns. The person filing the form must retain a letter, signed by the officer or agent authorized to sign the return, declaring under penalties of perjury that the facsimile signature appearing on the form is the signature adopted by the officer or agent and that the facsimile signature was affixed to the form by the officer or agent or at his or her direction. The letter must list each return by name and identifying number. The letter should not be sent to the Internal Revenue Service unless specifically requested by the Service. The letter shall be maintained for at least four years after the due date of such tax as the return relates, or the date such tax is paid, whichever is later.



SECTION 4. EFFECT ON OTHER DOCUMENTS

Rev. Rul. 82-29, 1982-1 C.B. 200, is modified to add the forms designated above to the list of forms for which facsimile signatures are accepted by the Service. Rev. Rul. 82-29 is clarified as to the definition of facsimile signature, and is modified to delete the requirement that each group of returns forwarded to the Internal Revenue Service be accompanied by a list of such returns and a letter, signed by the person authorized to sign the returns, adopting the signature on the returns.



SECTION 5. EFFECTIVE DATE

This revenue procedure is effective for any of the designated forms filed with the Internal Revenue Service on or after July 1, 2005.



SECTION 6. DRAFTING INFORMATION

The principal author of this revenue procedure is Richard Charles Grosenick of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this revenue procedure, contact Richard Charles Grosenick at (202) 622-7950 (not a toll-free call).

Signing of Individual Returns: Electronic signatures

The IRS Restructuring and Reform Act of 1998 (P.L. 105-206) requires the IRS to develop procedures for the acceptance of signatures in digital or other electronic form (Code Sec. 6061(b)). Until the procedures are in place, the IRS is authorized to: (1) waive the requirement of a signature for designated types or classes of returns, declarations, statements, or other documents or (2) provide for alternative methods of signing these items (see for example Notice 2000-19 and Rev. Proc. 2005-39.

An alternative method of signature will be treated identically, for both civil and criminal purposes, as a signature on a paper form. The IRS must publish guidance to define and implement any signature waiver or alternative signature methods (Code Sec. 6061(b)(2) and Code Sec. 6061(b)(3)).

The IRS's e-file program allows taxpayers to file their returns electronically using an Authorized IRS e-file provider, a personal computer or, for those who are eligible, Free File. (The IRS announced that it would discontinue the TeleFile program (which allowed taxpayers to file their returns electronically using the telephone) after August 16, 2005 (Announcement 2005-26, 2005-1 CB 969)). Tax professionals accepted into the electronic filing program, called authorized IRS e-file Providers, are the electronic return originators (EROs) who transmit tax return information to the IRS. With respect to e-file signature alternatives, the Self-Select PIN Method allows individuals to electronically sign an e-file return by selecting a five-digit PIN. The Practitioner PIN Method is an e-file signature option for those who use an ERO. For more information on the IRS e-file program.

The IRS will allow EROs to sign the following forms by rubber stamp, mechanical device (such as signature pen), or computer software program: Form 8453, U.S. Individual Income Tax Declaration for an IRS e-file Return; Form 8878, IRS e-file Signature Authorization for Form 4868 or Form 2350; and Form 8879, IRS e-file Signature Authorization, for any Form 8453, Form 8878, or Form 8879 filed on or after October 15, 2007 (Notice 2007-79,. These alternative methods of signing authorized in Notice 2007-79 must include either a facsimile of the individual ERO's signature or of the ERO's printed name. EROs using one of these alternative means are personally responsible for affixing their signatures to returns or requests for extension. Notice 2007-79 applies only to EROs that sign Form 8453, Form 8878, or Form 8879, and does not alter the signature requirements for any other type of document currently required to be manually signed, such as elections, applications for changes in accounting method, powers of attorney, or consent forms. It also does not alter the requirement that Form 8453, Form 8878, or Form 8879 be signed by the taxpayer making these forms by handwritten signature or other authorized means (Notice 2007-79).




Cumulative Bulletin Notice 2000-19, 2000-1 CB 845 , March 13, 2000.

PURPOSE
This notice informs taxpayers that the Internal Revenue Service is temporarily waiving the signature requirement for Form SS-4, Application for Employer Identification Number, as authorized by §6061(b)(1)(A) of the Internal Revenue Code.



BACKGROUND
Section 6061(a) generally provides that any return, statement, or other document required to be made under any provision of the internal revenue laws or regulations must be signed in accordance with forms or regulations prescribed by the Secretary of the Treasury.

Section 6061(b)(1) requires the Secretary to develop procedures for accepting signatures in digital or other electronic form. Until such time as these procedures are in place, §6061(b)(1)(A) authorizes the Secretary to waive the requirement of a signature for a particular type or class of return, declaration, statement, or other document required or permitted to be made under the Code.

Section 6061(b)(3) requires that the Secretary define and implement any waiver of the signature requirements through appropriate published guidance.

Section 6109(a) provides, in part, that when required by regulations, any person required to make a return, statement, or other document must include in such return, statement, or other document such identifying number as may be prescribed for securing proper identification of such person.

Section 301.6109-1(a)(1)(ii)(C) of the Regulations on Procedure and Administration provides that any person other than an individual (such as a corporation, partnership, nonprofit association, trust, estate, or similar nonindividual person) that is required to furnish a taxpayer identifying number must use an employer identification number (EIN).

Section 301.6109-1(d)(2)(i) provides that any person required to furnish an EIN must apply for one on Form SS-4. The form, together with any supplementary statement, must be prepared and filed in accordance with the form, accompanying instructions, and relevant regulations, and must set forth fully and clearly the requested data. Form SS-4 requires the applicant to sign the form and verify by a written declaration that it is made under penalties of perjury.

REASONS FOR SIGNATURE WAIVER FOR FORM SS-4

The Service is exploring methods of filing Form SS-4 other than on paper, such as magnetic media and other electronic means. As these alternative methods of filing Form SS-4 evolve, the Service intends to provide procedures for accepting signatures in digital or other electronic form. Until such time as these procedures are in place, the Service is waiving the requirement under §6061(a) that taxpayers sign Form SS-4. This waiver applies to Forms SS-4 currently filed on paper, as well as to Forms SS-4 that eventually may be filed through electronic means. However, because this waiver is only temporary, the Service does not intend to remove the signature line from the paper version of Form SS-4.



EFFECTIVE DATE
This Notice is effective for Forms SS-4 filed on or after March 13, 2000.



DRAFTING INFORMATION
The principal author of this notice is Andrew J. Keyso of the Office of the Assistant Chief Counsel (Income Tax and Accounting). For further information regarding this notice contact Mr. Keyso at (202) 622-4910 (not a toll-free call).

6694 penalty - "should have known"

Section 1.6694(a)(1) references understatements of tax resulting from a position that the return preparer knew (or reasonably should have known).

The penalty will apply under 6694(a), as amended, even under the reduced standards if the return preparer "reasonably should have known" that the position taken would have resulted in any understatement of tax.

That term is a very dangerous standard for return preparers. It is my opinion that the IRS will conclude that the return preparer "reasonably should have known" everyting in the Internal Revenue Code and the published regulations under the Code.
But the list goes on: IRS published positions (e.g., notices, revenue rulings, revenue procedures). Those are obvious things the return preparer reasonably should know. I suspect this this comes as a wake up call for many of those reading this blog.

However, it gets worse. I believe the IRS will take the position that the return preparer should have known about long standing case law.

All of the above will flunk the "reasonable basis" and "substantial authority" standards where the obvious law is readily available from basic tax research and analysis.

Of course, these issues do not arise if there is no understatement of tax. Without question, tax return preparers will have have the facility to research applicable tax law.

There is no doubt that this terminology will survive into the final 6694 regulations.

You can expect that the IRS examination software used by the IRS Service Centers will build in section 6694 for understatements of tax for tax returns prepared by return preparers for the 2008 tax year that will be filed in 2009. I expect the 6694 penalties to hit return preparers in 2009.

6707A possible applicaion to return preparers

As we all know, section 6694 deals with the responsibility of tax return preparer in preparing tax returns (e.g., 1040, 706, 1120, etc.) Section 6694 provides a penalty to return preparers for unreasonable positions (“content”) that is not adequately supported under tax law.

As a point of logic, if a return preparer has technical responsibility for the preparation of tax returns, why would the return preparer be responsible for some “content” (e.g. a technical position) and not other “content” such as “reportable transactions” and “listed transactions” as defined in section 6707A.

Section 6011 is the statute authorizing IRS reporting and information requirements. For this reason both “reportable transactions” and “listed transactions” reference section 6011.

Given the fact that “listed transactions” deal with defined tax avoidance transactions reported in a tax return, it would be strange in the extreme to take the position that the same return preparer, responsible for technical content, is not also responsible for the listed transaction in the same tax return.

Lastly, section 6707A(a) is expressly applicable to any “person who fails to include on any return or statement” the reportable or listed transactions. Section 7701(a)(1) defines the term “person” without reference to a “return preparer.” However, 7701(a)(1) includes an individual, a corporation, etc. and return preparers are individuals, corporations and similar entities. Note also that the language of 6707A elects to use the term “person” instead of the term “taxpayer.”

There is other opinion that return preparers are not included in the term “person” in section 6707A. Notwithstanding, there is no downside for return preparers to be alert to all IRS “reportable” and “listed” transactions. The $100,000 and $200,000 penalties should be enough for return preparers to play it safe and either report or stay away from these transactions.

1.6694-2 of the proposed regullations

Section 1.6694-2(b) provides, as follows:

(b) Reasonable belief that the position would more likely than not be sustained on its merits—

(1) In general. A tax return preparer may “reasonably believe that a position would more likely than not be sustained on its merits” if the tax return preparer analyzes the pertinent facts and authorities, and in reliance upon that analysis, reasonably concludes in good faith that the position has a greater than 50 percent likelihood of being sustained on its merits. In reaching this conclusion, the possibility that the position will not be challenged by the Internal Revenue Service (IRS) (for example, because the taxpayer’s return may not be audited or because the issue may not be raised on audit) is not to be taken into account. The analysis prescribed by §1.6662-4(d)(3)(ii) (or any successor provision) for purposes of determining whether substantial authority is present applies for purposes of determining whether the more likely than not standard is satisfied. Whether a tax return preparer meets this standard will be determined based upon all facts and circumstances, including the tax return preparer’s diligence. In determining the level of diligence in a particular situation, the tax return preparer’s experience with the area of Federal tax law and familiarity with the taxpayer’s affairs, as well as the complexity of the issues and facts, will be taken into account. A tax return preparer may reasonably believe that a position more likely than not would be sustained on its merits despite the absence of other types of authority if the position is supported by a well-reasoned construction of the applicable statutory provision. For purposes of determining whether the tax return preparer has a reasonable belief that the position would more likely than not be sustained on the merits, a tax return preparer may rely in good faith without verification upon information furnished by the taxpayer, advisor, other tax return preparer, or other party (including another advisor or tax return preparer at the tax return preparer’s firm), as provided in §1.6694-1(e).

(2) No unreasonable assumptions. A position must not be based on unreasonable factual or legal assumptions (including assumptions as to future events) and must not unreasonably rely on the representations, statements, findings, or agreements of the taxpayer or any other person. For example, a position must not be based on a representation or assumption that the tax return preparer knows, or has reason to know, is inaccurate.

Under section 6694(a)(2)(A) as amended, the "more likely than not standard" was replaced by the "substantial authority" standard of conduct.

For that reason, the final regulations will amend section 1.6694-2(b) to provide that the return preparer must have a reasonable belief that the position will be sutained on its merits with "substantial authority."

The quantitavie analysis required will be reduced from "greater than 50 percent" to most likely "greater than 40%. It is hard to see what difference that will make because the "more likely than not" sandard and the "substantial authority" standard are each subjective standards.

If a return preparer is "negligent" then the penalty will apply automatically because the "substantial authority" standard will apply even if the return preparer is not negligent. If a return preparer is "negligent" then the $5,000
reckless" penalty will likely apply. Why? Because the position taken in the return MUST NOT be based on a representation or assumption that the tax return preparer knows, or has reason to know, is inaccurate.

How can any return preparer have a client that is negligent and then be able to take the position that he "had no reason to know" that his client was negligent?

Suppose the 6662 20% penalty applies to a client because the client did not did not have the records required under section 6001. How can a return preparer claim that he or she had no reason to know that the client kept inadequate records to substantiate expenses and deductions? A few questions to a client should surface the quality of client's records. Reliance on taxpayer data does not mean that the return preparer can get away with asking basic questions about the quality of the data.

In short, every time the section 6662 penalty applies to a client, the return preparer will have to defend against an IRS accusation that the return preparer had reason to know that the taxpayer/client was negligent. The IRS is an aggressive organization on examination issues. You can fairly assume that the IRS will always argue "you had reason to know" and then cite the regulations as their authority for that qestion. Now that the "reckless" penalty is $5,000, what will stop the IRS from determining that the return preparer is "reckless" when the taxpayer client is negligent? Also, the IRS assessment of the return preparer on the 6694(b) $5,000 penalty will be presumed to be correct.

The solution is simple. Even though the proposed regulations say you can rely on information provided by your client, do not fall for that "trap." Return preparers will need to make sure that the taxpayer can support all of the data submitted to the return preparer. After that threshold is passed, the return preparer will have to make sure the positions taken meet the "substantial authority" standard.

Given the large size of the penalties, it would be foolish for return preparers to think that they can rely on statements furnished by their clients without verification. More work is involved, but then you can charge for that additional time needed to prepare tax returns. Schedule C data should always be closely verified.

The questions sent to ab@irstaxattorney have been helpful. Requests for seminars will not be considered for attendance less than 50.

6111 regulations dealing with disclosure issues

In the Prior Blog, the huge pernalties under section 6707A were identified dealing with "reportable transactions" and "listed transactions." The following regulations deal with some of the disclosure law. All return preparers need to be familiar with the 6111 regulations.

1.6011-4., Requirement of statement disclosing participation in certain transactions by taxpayers

(a) In general. --Every taxpayer that has participated, as described in paragraph (c)(3) of this section, in a reportable transaction within the meaning of paragraph (b) of this section and who is required to file a tax return must file within the time prescribed in paragraph (e) of this section a disclosure statement in the form prescribed by paragraph (d) of this section. The fact that a transaction is a reportable transaction shall not affect the legal determination of whether the taxpayer's treatment of the transaction is proper.

(b) Reportable transactions
(1) In general. --A reportable transaction is a transaction described in any of the paragraphs (b)(2) through (7) of this section. The term transaction includes all of the factual elements relevant to the expected tax treatment of any investment, entity, plan, or arrangement, and includes any series of steps carried out as part of a plan.
(2) Listed transactions. --A listed transaction is a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service (IRS) has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance as a listed transaction.
(3) Confidential transactions
(i) In general. --A confidential transaction is a transaction that is offered to a taxpayer under conditions of confidentiality and for which the taxpayer has paid an advisor a minimum fee.
(ii) Conditions of confidentiality. --A transaction is considered to be offered to a taxpayer under conditions of confidentiality if the advisor who is paid the minimum fee places a limitation on disclosure by the taxpayer of the tax treatment or tax structure of the transaction and the limitation on disclosure protects the confidentiality of that advisor's tax strategies. A transaction is treated as confidential even if the conditions of confidentiality are not legally binding on the taxpayer. A claim that a transaction is proprietary or exclusive is not treated as a limitation on disclosure if the advisor confirms to the taxpayer that there is no limitation on disclosure of the tax treatment or tax structure of the transaction.

(iii) Minimum fee. --For purposes of this paragraph (b)(3), the minimum fee is --

(A) $250,000 for a transaction if the taxpayer is a corporation;

(B) $50,000 for all other transactions unless the taxpayer is a partnership or trust, all of the owners or beneficiaries of which are corporations (looking through any partners or beneficiaries that are themselves partnerships or trusts), in which case the minimum fee is $250,000.

(iv) Determination of minimum fee. --For purposes of this paragraph (b)(3), in determining the minimum fee, all fees for a tax strategy or for services for advice (whether or not tax advice) or for the implementation of a transaction are taken into account. Fees include consideration in whatever form paid, whether in cash or in kind, for services to analyze the transaction (whether or not related to the tax consequences of the transaction), for services to implement the transaction, for services to document the transaction, and for services to prepare tax returns to the extent return preparation fees are unreasonable in light of the facts and circumstances. For purposes of this paragraph (b)(3), a taxpayer also is treated as paying fees to an advisor if the taxpayer knows or should know that the amount it pays will be paid indirectly to the advisor, such as through a referral fee or fee-sharing arrangement. A fee does not include amounts paid to a person, including an advisor, in that person's capacity as a party to the transaction. For example, a fee does not include reasonable charges for the use of capital or the sale or use of property. The IRS will scrutinize carefully all of the facts and circumstances in determining whether consideration received in connection with a confidential transaction constitutes fees.

(v) Related parties. --For purposes of this paragraph (b)(3), persons who bear a relationship to each other as described in section 267(b) or 707(b) will be treated as the same person.

(4) Transactions with contractual protection

(i) In general. --A transaction with contractual protection is a transaction for which the taxpayer or a related party (as described in section 267(b) or 707(b)) has the right to a full or partial refund of fees (as described in paragraph (b)(4)(ii) of this section) if all or part of the intended tax consequences from the transaction are not sustained. A transaction with contractual protection also is a transaction for which fees (as described in paragraph (b)(4)(ii) of this section) are contingent on the taxpayer's realization of tax benefits from the transaction. All the facts and circumstances relating to the transaction will be considered when determining whether a fee is refundable or contingent, including the right to reimbursements of amounts that the parties to the transaction have not designated as fees or any agreement to provide services without reasonable compensation.

(ii) Fees. --Paragraph (b)(4)(i) of this section only applies with respect to fees paid by or on behalf of the taxpayer or a related party to any person who makes or provides a statement, oral or written, to the taxpayer or related party (or for whose benefit a statement is made or provided to the taxpayer or related party) as to the potential tax consequences that may result from the transaction.

(iii) Exceptions

(A) Termination of transaction. --A transaction is not considered to have contractual protection solely because a party to the transaction has the right to terminate the transaction upon the happening of an event affecting the taxation of one or more parties to the transaction.

(B) Previously reported transaction. --If a person makes or provides a statement to a taxpayer as to the potential tax consequences that may result from a transaction only after the taxpayer has entered into the transaction and reported the consequences of the transaction on a filed tax return, and the person has not previously received fees from the taxpayer relating to the transaction, then any refundable or contingent fees are not taken into account in determining whether the transaction has contractual protection. This paragraph (b)(4) does not provide any substantive rules regarding when a person may charge refundable or contingent fees with respect to a transaction. See Circular 230, 31 CFR Part 10, for the regulations governing practice before the IRS.
(5) Loss transactions

(i) In general. --A loss transaction is any transaction resulting in the taxpayer claiming a loss under section 165 of at least --

(A) $10 million in any single taxable year or $20 million in any combination of taxable years for corporations;

(B) $10 million in any single taxable year or $20 million in any combination of taxable years for partnerships that have only corporations as partners (looking through any partners that are themselves partnerships), whether or not any losses flow through to one or more partners; or

(C) $2 million in any single taxable year or $4 million in any combination of taxable years for all other partnerships, whether or not any losses flow through to one or more partners;

(D) $2 million in any single taxable year or $4 million in any combination of taxable years for individuals, S corporations, or trusts, whether or not any losses flow through to one or more shareholders or beneficiaries; or

(E) $50,000 in any single taxable year for individuals or trusts, whether or not the loss flows through from an S corporation or partnership, if the loss arises with respect to a section 988 transaction (as defined in section 988(c)(1) relating to foreign currency transactions).
(ii) Cumulative losses. --In determining whether a transaction results in a taxpayer claiming a loss that meets the threshold amounts over a combination of taxable years as described in paragraph (b)(5)(i) of this section, only losses claimed in the taxable year that the transaction is entered into and the five succeeding taxable years are combined.

(iii) Section 165 loss

(A) For purposes of this section, in determining the thresholds in paragraph (b)(5)(i) of this section, the amount of a section 165 loss is adjusted for any salvage value and for any insurance or other compensation received. See §1.165-1(c)(4). However, a section 165 loss does not take into account offsetting gains, or other income or limitations. For example, a section 165 loss does not take into account the limitation in section 165(d) (relating to wagering losses) or the limitations in sections 165(f), 1211, and 1212 (relating to capital losses). The full amount of a section 165 loss is taken into account for the year in which the loss is sustained, regardless of whether all or part of the loss enters into the computation of a net operating loss under section 172 or a net capital loss under section 1212 that is a carryback or carryover to another year. A section 165 loss does not include any portion of a loss, attributable to a capital loss carryback or carryover from another year, that is treated as a deemed capital loss under section 1212.

(B) For purposes of this section, a section 165 loss includes an amount deductible pursuant to a provision that treats a transaction as a sale or other disposition, or otherwise results in a deduction under section 165. A section 165 loss includes, for example, a loss resulting from a sale or exchange of a partnership interest under section 741 and a loss resulting from a section 988 transaction.

(6) Transactions of interest. --A transaction of interest is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has identified by notice, regulation, or other form of published guidance as a transaction of interest.

(7) [Reserved].

(8) Exceptions

(i) In general. --A transaction will not be considered a reportable transaction, or will be excluded from any individual category of reportable transaction under paragraphs (b)(3) through (7) of this section, if the Commissioner makes a determination by published guidance that the transaction is not subject to the reporting requirements of this section. The Commissioner may make a determination by individual letter ruling under paragraph (f) of this section that an individual letter ruling request on a specific transaction satisfies the reporting requirements of this section with regard to that transaction for the taxpayer who requests the individual letter ruling.

(ii) Special rule for RICs. --For purposes of this section, a regulated investment company (RIC) as defined in section 851 or an investment vehicle that is owned 95 percent or more by one or more RICs at all times during the course of the transaction is not required to disclose a transaction that is described in any of paragraphs (b)(3) through (5) and (b)(7) of this section unless the transaction is also a listed transaction or a transaction of interest.

(c) Definitions. --For purposes of this section, the following definitions apply:

(1) Taxpayer. --The term taxpayer means any person described in section 7701(a)(1), including S corporations. Except as otherwise specifically provided in this section, the term taxpayer also includes an affiliated group of corporations that joins in the filing of a consolidated return under section 1501.

(2) Corporation. --When used specifically in this section, the term corporation means an entity that is required to file a return for a taxable year on any 1120 series form, or successor form, excluding S corporations.
(3) Participation

(i) In general
(A) Listed transactions. --A taxpayer has participated in a listed transaction if the taxpayer's tax return reflects tax consequences or a tax strategy described in the published guidance that lists the transaction under paragraph (b)(2) of this section. A taxpayer also has participated in a listed transaction if the taxpayer knows or has reason to know that the taxpayer's tax benefits are derived directly or indirectly from tax consequences or a tax strategy described in published guidance that lists a transaction under paragraph (b)(2) of this section. Published guidance may identify other types or classes of persons that will be treated as participants in a listed transaction. Published guidance also may identify types or classes of persons that will not be treated as participants in a listed transaction.

(B) Confidential transactions. --A taxpayer has participated in a confidential transaction if the taxpayer's tax return reflects a tax benefit from the transaction and the taxpayer's disclosure of the tax treatment or tax structure of the transaction is limited in the manner described in paragraph (b)(3) of this section. If a partnership's, S corporation's or trust's disclosure is limited, and the partner's, shareholder's, or beneficiary's disclosure is not limited, then the partnership, S corporation, or trust, and not the partner, shareholder, or beneficiary, has participated in the confidential transaction.

(C) Transactions with contractual protection. --A taxpayer has participated in a transaction with contractual protection if the taxpayer's tax return reflects a tax benefit from the transaction and, as described in paragraph (b)(4) of this section, the taxpayer has the right to the full or partial refund of fees or the fees are contingent. If a partnership, S corporation, or trust has the right to a full or partial refund of fees or has a contingent fee arrangement, and the partner, shareholder, or beneficiary does not individually have the right to the refund of fees or a contingent fee arrangement, then the partnership, S corporation, or trust, and not the partner, shareholder, or beneficiary, has participated in the transaction with contractual protection.

(D) Loss transactions. --A taxpayer has participated in a loss transaction if the taxpayer's tax return reflects a section 165 loss and the amount of the section 165 loss equals or exceeds the threshold amount applicable to the taxpayer as described in paragraph (b)(5)(i) of this section. If a taxpayer is a partner in a partnership, shareholder in an S corporation, or beneficiary of a trust and a section 165 loss as described in paragraph (b)(5) of this section flows through the entity to the taxpayer (disregarding netting at the entity level), the taxpayer has participated in a loss transaction if the taxpayer's tax return reflects a section 165 loss and the amount of the section 165 loss that flows through to the taxpayer equals or exceeds the threshold amounts applicable to the taxpayer as described in paragraph (b)(5)(i) of this section. For this purpose, a tax return is deemed to reflect the full amount of a section 165 loss described in paragraph (b)(5) of this section allocable to the taxpayer under this paragraph (c)(3)(i)(D), regardless of whether all or part of the loss enters into the computation of a net operating loss under section 172 or net capital loss under section 1212 that the taxpayer may carry back or carry over to another year.

(E) Transactions of interest. --A taxpayer has participated in a transaction of interest if the taxpayer is one of the types or classes of persons identified as participants in the transaction in the published guidance describing the transaction of interest.

(F) [Reserved].

(G) Shareholders of foreign corporations

(1) In general. --A reporting shareholder of a foreign corporation participates in a transaction described in paragraphs (b)(2) through (5) and (b)(7) of this section if the foreign corporation would be considered to participate in the transaction under the rules of this paragraph (c)(3) if it were a domestic corporation filing a tax return that reflects the items from the transaction. A reporting shareholder of a foreign corporation participates in a transaction described in paragraph (b)(6) of this section only if the published guidance identifying the transaction includes the reporting shareholder among the types or classes of persons identified as participants. A reporting shareholder (and any successor in interest) is considered to participate in a transaction under this paragraph (c)(3)(i)(G) only for its first taxable year with or within which ends the first taxable year of the foreign corporation in which the foreign corporation participates in the transaction, and for the reporting shareholder's five succeeding taxable years.

(2) Reporting shareholder. --The term reporting shareholder means a United States shareholder (as defined in section 951(b)) in a controlled foreign corporation (as defined in section 957) or a 10 percent shareholder (by vote or value) of a qualified electing fund (as defined in section 1295).

(ii) Examples. --The following examples illustrate the provisions of paragraph (c)(3)(i) of this section:

Example 1. Notice 2003-55 (2003-2 CB 395), which modified and superseded Notice 95-53 (1995-2 CB 334) (see §601.601(d)(2) of this chapter), describes a lease stripping transaction in which one party (the transferor) assigns the right to receive future payments under a lease of tangible property and treats the amount realized from the assignment as its current income. The transferor later transfers the property subject to the lease in a transaction intended to qualify as a transferred basis transaction, for example, a transaction described in section 351. The transferee corporation claims the deductions associated with the high basis property subject to the lease. The transferor's and transferee corporation's tax returns reflect tax positions described in Notice 2003-55. Therefore, the transferor and transferee corporation have participated in the listed transaction. In the section 351 transaction, the transferor will have received stock with low value and high basis from the transferee corporation. If the transferor subsequently transfers the high basis/low value stock to a taxpayer in another transaction intended to qualify as a transferred basis transaction and the taxpayer uses the stock to generate a loss, and if the taxpayer knows or has reason to know that the tax loss claimed was derived indirectly from the lease stripping transaction, then the taxpayer has participated in the listed transaction. Accordingly, the taxpayer must disclose the transaction and the manner of the taxpayer's participation in the transaction under the rules of this section. For purposes of this example, if a bank lends money to the transferor, transferee corporation, or taxpayer for use in their transactions, the bank has not participated in the listed transaction because the bank's tax return does not reflect tax consequences or a tax strategy described in the listing notice (nor does the bank's tax return reflect a tax benefit derived from tax consequences or a tax strategy described in the listing notice) nor is the bank described as a participant in the listing notice.

Example 2. XYZ is a limited liability company treated as a partnership for tax purposes. X, Y, and Z are members of XYZ. X is an individual, Y is an S corporation, and Z is a partnership. XYZ enters into a confidential transaction under paragraph (b)(3) of this section. XYZ and X are bound by the confidentiality agreement, but Y and Z are not bound by the agreement. As a result of the transaction, XYZ, X, Y, and Z all reflect a tax benefit on their tax returns. Because XYZ's and X's disclosure of the tax treatment and tax structure are limited in the manner described in paragraph (b)(3) of this section and their tax returns reflect a tax benefit from the transaction, both XYZ and X have participated in the confidential transaction. Neither Y nor Z has participated in the confidential transaction because they are not subject to the confidentiality agreement.

Example 3. P, a corporation, has an 80% partnership interest in PS, and S, an individual, has a 20% partnership interest in PS. P, S, and PS are calendar year taxpayers. In 2006, PS enters into a transaction and incurs a section 165 loss (that does not meet any of the exceptions to a section 165 loss identified in published guidance) of $12 million and offsetting gain of $3 million. On PS' 2006 tax return, PS includes the section 165 loss and the corresponding gain. PS must disclose the transaction under this section because PS' section 165 loss of $12 million is equal to or greater than $2 million. P is allocated $9.6 million of the section 165 loss and $2.4 million of the offsetting gain. P does not have to disclose the transaction under this section because P's section 165 loss of $9.6 million is not equal to or greater than $10 million. S is allocated $2.4 million of the section 165 loss and $600,000 of the offsetting gain. S must disclose the transaction under this section because S's section 165 loss of $2.
(4) Substantially similar. --The term substantially similar includes any transaction that is expected to obtain the same or similar types of tax consequences and that is either factually similar or based on the same or similar tax strategy. Receipt of an opinion regarding the tax consequences of the transaction is not relevant to the determination of whether the transaction is the same as or substantially similar to another transaction. Further, the term substantially similar must be broadly construed in favor of disclosure. For example, a transaction may be substantially similar to a listed transaction even though it involves different entities or uses different Internal Revenue Code provisions. (See for example, Notice 2003-54 (2003-2 CB 363), describing a transaction substantially similar to the transactions in Notice 2002-50 (2002-2 CB 98), and Notice 2002-65 (2002-2 CB 690).) The following examples illustrate situations where a transaction is the same as or substantially similar to a listed transaction under paragraph (b)(2) of this section. (Such transactions may also be reportable transactions under paragraphs (b)(3) through (7) of this section.) See §601.601(d)(2)(ii)(b) of this chapter. The following examples illustrate the provisions of this paragraph (c)(4):

Example 1. Notice 2000-44 (2000-2 CB 255) (see §601.601(d)(2)(ii)(b) of this chapter), sets forth a listed transaction involving offsetting options transferred to a partnership where the taxpayer claims basis in the partnership for the cost of the purchased options but does not adjust basis under section 752 as a result of the partnership's assumption of the taxpayer's obligation with respect to the options. Transactions using short sales, futures, derivatives or any other type of offsetting obligations to inflate basis in a partnership interest would be the same as or substantially similar to the transaction described in Notice 2000-44. Moreover, use of the inflated basis in the partnership interest to diminish gain that would otherwise be recognized on the transfer of a partnership asset would also be the same as or substantially similar to the transaction described in Notice 2000-44. See §601.601(d)(2)(ii)(b).

Example 2. Notice 2001-16 (2001-1 CB 730) (see §601.601(d)(2)(ii)(b) of this chapter), sets forth a listed transaction involving a seller (X) who desires to sell stock of a corporation (T), an intermediary corporation (M), and a buyer (Y) who desires to purchase the assets (and not the stock) of T. M agrees to facilitate the sale to prevent the recognition of the gain that T would otherwise report. Notice 2001-16 describes M as a member of a consolidated group that has a loss within the group or as a party not subject to tax. Transactions utilizing different intermediaries to prevent the recognition of gain would be the same as or substantially similar to the transaction described in Notice 2001-16. An example is a transaction in which M is a corporation that does not file a consolidated return but which buys T stock, liquidates T, sells assets of T to Y, and offsets the gain on the sale of those assets with currently generated losses. See §601.601(d)(2)(ii)(b).

(5) Tax. --The term tax means Federal income tax.

(6) Tax benefit. --A tax benefit includes deductions, exclusions from gross income, nonrecognition of gain, tax credits, adjustments (or the absence of adjustments) to the basis of property, status as an entity exempt from Federal income taxation, and any other tax consequences that may reduce a taxpayer's Federal income tax liability by affecting the amount, timing, character, or source of any item of income, gain, expense, loss, or credit.

(7) Tax return. --The term tax return means a Federal income tax return and a Federal information return.

(8) Tax treatment. --The tax treatment of a transaction is the purported or claimed Federal income tax treatment of the transaction.

(9) Tax structure. --The tax structure of a transaction is any fact that may be relevant to understanding the purported or claimed
(d) Form and content of disclosure statement. --A taxpayer required to file a disclosure statement under this section must file a completed Form 8886, "Reportable Transaction Disclosure Statement" (or a successor form), in accordance with this paragraph (d) and the instructions to the form. The Form 8886 (or a successor form) is the disclosure statement required under this section. The form must be attached to the appropriate tax return(s) as provided in paragraph (e) of this section. If a copy of a disclosure statement is required to be sent to the Office of Tax Shelter Analysis (OTSA) under paragraph (e) of this section, it must be sent in accordance with the instructions to the form. To be considered complete, the information provided on the form must describe the expected tax treatment and all potential tax benefits expected to result from the transaction, describe any tax result protection (as defined in §301.6111-3(c)(12) of this chapter) with respect to the transaction, and identify and describe the transaction in sufficient detail for the IRS to be able to understand the tax structure of the reportable transaction and the identity of all parties involved in the transaction. An incomplete Form 8886 (or a successor form) containing a statement that information will be provided upon request is not considered a complete disclosure statement. If the form is not completed in accordance with the provisions in this paragraph (d) and the instructions to the form, the taxpayer will not be considered to have complied with the disclosure requirements of this section. If a taxpayer receives one or more reportable transaction numbers for a reportable transaction, the taxpayer must include the reportable transaction number(s) on the Form 8886 (or a successor form). See §301.6111-3(d)(2) of this chapter.

(e) Time of providing disclosure
(1) In general. --The disclosure statement for a reportable transaction must be attached to the taxpayer's tax return for each taxable year for which a taxpayer participates in a reportable transaction. In addition, a disclosure statement for a reportable transaction must be attached to each amended return that reflects a taxpayer's participation in a reportable transaction. A copy of the disclosure statement must be sent to OTSA at the same time that any disclosure statement is first filed by the taxpayer pertaining to a particular reportable transaction. If a reportable transaction results in a loss which is carried back to a prior year, the disclosure statement for the reportable transaction must be attached to the taxpayer's application for tentative refund or amended tax return for that prior year. In the case of a taxpayer that is a partner in a partnership, a shareholder in an S corporation, or a beneficiary of a trust, the disclosure statement for a reportable transaction must be attached to the partnership, S corporation, or trust's tax return for each taxable year in which the partnership, S corporation, or trust participates in the transaction under the rules of paragraph (c)(3)(i) of this section. If a taxpayer who is a partner in a partnership, a shareholder in an S corporation, or a beneficiary of a trust receives a timely Schedule K-1 less than 10 calendar days before the due date of the taxpayer's return (including extensions) and, based on receipt of the timely Schedule K-1, the taxpayer determines that the taxpayer participated in a reportable transaction within the meaning of paragraph (c)(3) of this section, the disclosure statement will not be considered late if the taxpayer discloses the reportable transaction by filing a disclosure statement with OTSA within 60 calendar days after the due date of the taxpayer's return (including extensions). The Commissioner in his discretion may issue in published guidance other provisions for disclosure under §1.6011-4. (2) Special rules
(i) Listed transactions and transactions of interest. --In general, if a transaction becomes a listed transaction or a transaction of interest after the filing of a taxpayer's tax return (including an amended return) reflecting the taxpayer's participation in the listed transaction or transaction of interest and before the end of the period of limitations for assessment of tax for any taxable year in which the taxpayer participated in the listed transaction or transaction of interest, then a disclosure statement must be filed, regardless of whether the taxpayer participated in the transaction in the year the transaction became a listed transaction or a transaction of interest, with OTSA within 90 calendar days after the date on which the transaction became a listed transaction or a transaction of interest. The Commissioner also may determine the time for disclosure of listed transactions and transactions of interest in the published guidance identifying the transaction.

(ii) Loss transactions. --If a transaction becomes a loss transaction because the losses equal or exceed the threshold amounts as described in paragraph (b)(5)(i) of this section, a disclosure statement must be filed as an attachment to the taxpayer=s tax return for the first taxable year in which the threshold amount is reached and to any subsequent tax return that reflects any amount of section 165 loss from the transaction.

(3) Multiple disclosures. --The taxpayer must disclose the transaction in the time and manner provided for under the provisions of this section regardless of whether the taxpayer also plans to disclose the transaction under other published guidance, for example, §1.6662-3(c)(2).

(4) Example. --The following example illustrates the application of this paragraph (e):

Example. In January of 2008, F, a calendar year taxpayer, enters into a transaction that at the time is not a listed transaction and is not a transaction described in any of the paragraphs (b)(3) through (7) of this section. All the tax benefits from the transaction are reported on F's 2008 tax return filed timely in April 2009. On May 2, 2011, the IRS publishes a notice identifying the transaction as a listed transaction described in paragraph (b)(2) of this section. Upon issuance of the May 2, 2011 notice, the transaction becomes a reportable transaction described in paragraph (b) of this section. The period of limitations on assessment for F's 2008 taxable year is still open. F is required to file Form 8886 for the transaction with OTSA within 90 calendar days after May 2, 2011.

(f) Rulings and protective disclosures

(1) Rulings. --If a taxpayer requests a ruling on the merits of a specific transaction on or before the date that disclosure would otherwise be required under this section, and receives a favorable ruling as to the transaction, the disclosure rules under this section will be deemed to have been satisfied by that taxpayer with regard to that transaction, so long as the request fully discloses all relevant facts relating to the transaction which would otherwise be required to be disclosed under this section. If a taxpayer requests a ruling as to whether a specific transaction is a reportable transaction on or before the date that disclosure would otherwise be required under this section, the Commissioner in his discretion may determine that the submission satisfies the disclosure rules under this section for the taxpayer requesting the ruling for that transaction if the request fully discloses all relevant facts relating to the transaction which would otherwise be required to be disclosed under this section. The potential obligation of the taxpayer to disclose the transaction under this section will not be suspended during the period that the ruling request is pending.

(2) Protective disclosures. --If a taxpayer is uncertain whether a transaction must be disclosed under this section, the taxpayer may disclose the transaction in accordance with the requirements of this section and comply with all the provisions of this section, and indicate on the disclosure statement that the disclosure statement is being filed on a protective basis. The IRS will not treat disclosure statements filed on a protective basis any differently than other disclosure statements filed under this section. For a protective disclosure to be effective, the taxpayer must comply with these disclosure regulations by providing to the IRS all information requested by the IRS under this section.

(g) Retention of documents

(1) In accordance with the instructions to Form 8886 (or a successor form), the taxpayer must retain a copy of all documents and other records related to a transaction subject to disclosure under this section that are material to an understanding of the tax treatment or tax structure of the transaction. The documents must be retained until the expiration of the statute of limitations applicable to the final taxable year for which disclosure of the transaction was required under this section. (This document retention requirement is in addition to any document retention requirements that section 6001 generally imposes on the taxpayer.) The documents may include the following:

(i) Marketing materials related to the transaction;

(ii) Written analyses used in decision-making related to the transaction;

(iii) Correspondence and agreements between the taxpayer and any advisor, lender, or other party to the reportable transaction that relate to the transaction;

(iv) Documents discussing, referring to, or demonstrating the purported or claimed tax benefits arising from the reportable transaction; and documents, if any, referring to the business purposes for the reportable transaction.

(2) A taxpayer is not required to retain earlier drafts of a document if the taxpayer retains a copy of the final document (or, if there is no final document, the most recent draft of the document) and the final document (or most recent draft) contains all the information in the earlier drafts of the document that is material to an understanding of the purported tax treatment or tax structure of the transaction.
(h) Effective/applicability date

(1) In general. --This section applies to transactions entered into on or after August 3, 2007. However, this section applies to transactions of interest entered into on or after November 2, 2006. Paragraph (f)(1) of this section applies to ruling requests received on or after November 1, 2006. Otherwise, the rules that apply with respect to transactions entered into before August 3, 2007, are contained in §1.6011-4 in effect prior to August 3, 2007. (See 26 CFR part 1 revised as of April 1, 2007).

(2) [Reserved]. [Reg. §1.6011-4.]

.01 Historical Comment: Proposed 2/28/2000. Adopted 2/28/2003 by T.D. 9046. Amended 12/29/2003 by T.D. 9108, 11/1/2006 by T.D. 9295 and 7/31/2007 by T.D. 9350.


§1.6011-4., Requirement of statement disclosing participation in certain transactions by taxpayers, REG-129916-07, 9/26/2007.

Par. 2. Section 1.6011-4 is amended by:

1. Revising paragraphs (b)(7) and (c)(3)(i)(F).

2. Adding to paragraph (c)(3)(ii) Examples 4, 5, 6, and 7.

3. Revising paragraph (h)(2).

The revisions and additions read as follows:
***

(b) * * *
(7) Patented transactions

(i) In general. --A patented transaction is a transaction for which a taxpayer pays (directly or indirectly) a fee in any amount to a patent holder or the patent holder's agent for the legal right to use a tax planning method that the taxpayer knows or has reason to know is the subject of the patent. A patented transaction also is a transaction for which a taxpayer (the patent holder or the patent holder's agent) has the right to payment for another person's use of a tax planning method that is the subject of the patent.

(ii) Definitions. --For purposes of this paragraph (b)(7), the following definitions apply:

(A) Fee. --The term fee means consideration in whatever form paid, whether in cash or in kind, for the right to use a tax planning method that is the subject of a patent. The term fee includes any consideration the taxpayer knows or has reason to know will be paid indirectly to the patent holder or patent holder's agent, such as through a referral fee, fee-sharing arrangement, or license. The term fee does not include amounts paid in settlement of, or as the award of damages in, a suit for damages for infringement of the patent.

(B) Patent. --The term patent means a patent granted under the provisions of title 35 of the United States Code, or any foreign patent granting rights generally similar to those under a United States patent. See §1.1235-2(a). The term patent includes patents that have been applied for but not yet granted.

(C) Patent holder. --A person is a patent holder if --

(1) The person is a holder as defined in §1.1235-2(d) and (e);

(2) The person would be a holder as defined in §1.1235-2(d)(2) if the phrase S corporation or trust was substituted for the word partnership and the phrase shareholder or beneficiary was substituted for the words member and partner;

(3) The person is an employer of a holder as defined in §1.1235-2(d) and the holder transferred to the employer all substantial rights to the patent as defined in §1.1235-2(b); or

(4) The person receives all substantial rights to the patent as defined in §1.1235-2(b) in exchange (directly or indirectly) for consideration in any form.

(D) Patent holder's agent. --The term patent holder's agent means any person who has the permission of the patent holder to offer for sale or exchange, to sell or exchange, or to market a tax planning method that is the subject of a patent. The term patent holder's agent also means any person who receives (directly or indirectly) for or on behalf of a patent holder a fee in any amount for a tax planning method that is the subject of a patent.

(E) Payment. --The term payment includes consideration in whatever form paid, whether in cash or in kind, for the right to use a tax planning method that is the subject of a patent. For example, if a patent holder or patent holder's agent receives payment for a patented transaction and a separate payment for another transaction, part or all of the payment for the other transaction may be treated as payment for the patented transaction if the facts and circumstances indicate that the payment for the other transaction is in consideration for the patented transaction. The term payment also includes amounts paid in settlement of, or as the award of damages in, a suit for damages for infringement of the patent.

(F) Tax planning method. --The term tax planning method means any plan, strategy, technique, or structure designed to affect Federal income, estate, gift, generation skipping transfer, employment, or excise taxes. A patent issued solely for tax preparation software or other tools used to perform or model mathematical calculations or to provide mechanical assistance in the preparation of tax or information returns is not a tax planning method.

(iii) Related parties. --For purposes of this paragraph (b)(7), persons who bear a relationship to each other as described in section 267(b) or 707(b) will be treated as the same person.

***

(c) * * *
(3) * * *

(i) * * *

(F) Patented transactions. --A taxpayer has participated in a patented transaction, as defined in paragraph (b)(7) of this section, if the taxpayer's tax return reflects a tax benefit from the transaction (including a deduction for fees paid in any amount to the patent holder or patent holder's agent). A taxpayer also has participated in a patented transaction, as defined in paragraph (b)(7) of this section, if the taxpayer is the patent holder or patent holder's agent and the taxpayer's tax return reflects a tax benefit in relation to obtaining a patent for a tax planning method (including any deduction for amounts paid to the United States Patent and Trademark Office as required by title 35 of the United States Code and attorney's fees) or reflects income from a payment received from another person for the use of the tax planning method that is the subject of the patent.

***

(ii) * * *

Example 4. (i) A, an individual, creates a tax planning method and applies for a U.S. patent. A pays attorney fees in relation to obtaining the patent and A pays the fee required under title 35 of the United States Code for the patent application. Subsequently, C pays a fee to A for the legal right to use the tax planning method that C knows or has reason to know is the subject of A's patent. A's tax return reflects both a deduction for an amount paid in relation to obtaining a patent and income from C's payment to A for the legal right to use the tax planning method that is the subject of the patent. C's tax return reflects a deduction for an amount paid to A for the right to use the tax planning method that is the subject of the patent.

(ii) A is a patent holder under paragraph (b)(7)(ii)(C)(1) of this section. The transaction is a reportable transaction for A under paragraph (b)(7) of this section because A has the right to payment for another person's use of the tax planning method that is the subject of the patent. The transaction is a reportable transaction for C under paragraph (b)(7) of this section, because C paid a fee to A for the legal right to use a tax planning method that C knew or had reason to know was the subject of a patent. A has participated in the transaction in the year in which A's tax return reflects a tax benefit in relation to obtaining the patent or reflects income from C's payment to A for the legal right to use the tax planning method that is the subject of the patent. C has participated in the transaction in the year in which C's tax return reflects the deduction for any amount paid to A for the legal right to use the tax planning method that is the subject of the patent. C also participates in the transaction for any years for which any other tax benefit from the transaction is reflected on C's tax return.

Example 5. (i) A, an individual, is the employee of B, a corporation. A creates a tax planning method and applies for a U.S. patent but B pays the fee required under title 35 of the United States Code for A's patent application. Pursuant to A's employment contract with B, B holds all substantial rights to the patent. B's tax return reflects a deduction for the amount paid in relation to obtaining the patent.

(ii) A and B are patent holders under paragraph (b)(7)(ii)(C)(1) and (3) of this section, respectively. The transaction is not a reportable transaction for A under paragraph (b)(7) of this section because A does not have the right to payment for another person's use of the tax planning method that is the subject of the patent. The transaction is a reportable transaction for B under paragraph (b)(7) of this section because B holds all substantial rights to the patent and has the right to payment for another person's use of the tax planning method that is the subject of the patent. B has participated in the transaction in the year in which B's tax return reflects a tax benefit in relation to obtaining the patent. B also participates in the transaction for any years for which B's tax return reflects income from a payment received from another person for the use of the tax planning method that is the subject of the patent.

Example 6. (i) Assume the facts as in Example 4, except that A agrees to license the patent to F, a financial institution. The license agreement between A and F provides that F may offer the tax planning method to its clients and if a client decides to use the tax planning method, F must pay A for each client's use of the tax planning method. F offers the tax planning method to G who uses the tax planning method and knows or has reason to know it is the subject of a patent. F charges G for financial planning services and pays A for G's use of the tax planning method. A's tax return reflects income from the payment received from F. F's tax return reflects income from the payment received from G, and G's tax return reflects a deduction for the fees paid to F.

(ii) F is a patent holder's agent under paragraph (b)(7)(ii)(D) of this section because F has the permission of the patent holder to offer for sale or exchange, to sell or exchange, or to market a tax planning method that is the subject of a patent. F also is a patent holder's agent under paragraph (b)(7)(ii)(D) of this section because F receives (directly or indirectly) a fee in any amount for a tax planning method that is the subject of a patent for or on behalf of a patent holder. The transaction is a reportable transaction for both A and F under paragraph (b)(7) of this section because A and F each have the right to payment for another person's use of the tax planning method that is the subject of the patent. The transaction is a reportable transaction for G under paragraph (b)(7) of this section because G paid a fee (directly or indirectly) to a patent holder or a patent holder's agent for the legal right to use a tax planning method that G knew or had reason to know was the subject of the patent. A has participated in the transaction in the years in which A's tax return reflects income from the payment received from F for G's use of the tax planning method that is the subject of the patent. F has participated in the transaction in the years in which F's tax return reflects income from the payment received from G for use of the tax planning method that is the subject of the patent. G has participated in the transaction in the years in which G's tax return reflects a deduction for the fees paid to F. G also participates in the transaction for any years for which any other tax benefit from the transaction is reflected on G's tax return.

Example 7. Assume the same facts as in Example 4. J uses a tax planning method that is the same as the tax planning method that is the subject of A's patent. J does not pay any fees to any patent holder or patent holder's agent with respect to the tax planning method that is the subject of the patent. A sues J for infringement of the patent and J pays A an amount for damages. A's tax return reflects as income the amounts for damages received from J. The transaction is not a reportable transaction for J under paragraph (b)(7) of this section because J did not pay any fees (as defined in paragraph (b)(7)(ii)(A) of this section) (directly or indirectly) to a patent holder or patent holder's agent for the legal right to use a tax planning method that J knew or had reason to know was the subject of the patent. A has participated in a reportable transaction under paragraph (b)(7) of this section in the year in which A's tax return reflects income from a payment (the amount received as an award for damages in a suit for damages for infringement of the patent) received from another person for the use of the tax planning method that is the subject of a patent.

***
(h) * * *

(2) Patented transactions. --Upon the publication of the Treasury decision adopting these rules as final regulations in the Federal Register, paragraphs (b)(7), (c)(3)(i)(F), and (c)(3)(ii) Examples 4 through 7 of this section will apply to transactions entered into on or after September 26, 2007.

return preparers and 6707A liability

Return preparers are "persons" within the meaning of section 6707A. Therefore, if a return preparer is involved with a tax return that supports a "reportable transaction" or a "listed transaction" then the $10,000 and $100,000 penalties will apply.

Obviously, return preparers need to be aware of all of the IRS "listed transactions" and "reportable transactions." New positions are published by the IRS at a regular rate. If you do not keep up with those IRS notices, then at least be aware of any transaction that has the potential for tax avoidance or tax evasion.



PENALTY FOR FAILURE TO INCLUDE REPORTABLE TRANSACTION INFORMATION WITH RETURN



6707A(a) IMPOSITION OF PENALTY. --Any person who fails to include on any return or statement any information with respect to a reportable transaction which is required under section 6011 to be included with such return or statement shall pay a penalty in the amount determined under subsection (b).



6707A(b) AMOUNT OF PENALTY. --



6707A(b)(1) IN GENERAL. --Except as provided in paragraph (2), the amount of the penalty under subsection (a) shall be --



6707A(b)(1)(A) $10,000 in the case of a natural person, and



6707A(b)(1)(B) $50,000 in any other case.



6707A(b)(2) LISTED TRANSACTION. --The amount of the penalty under subsection (a) with respect to a listed transaction shall be --



6707A(b)(2)(A) $100,000 in the case of a natural person, and



6707A(b)(2)(B) $200,000 in any other case.



6707A(c) DEFINITIONS. --For purposes of this section:



6707A(c)(1) REPORTABLE TRANSACTION. --The term "reportable transaction" means any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion.



6707A(c)(2) LISTED TRANSACTION. --The term "listed transaction" means a reportable transaction which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011.



6707A(d) AUTHORITY TO RESCIND PENALTY. --



6707A(d)(1) IN GENERAL. --The Commissioner of Internal Revenue may rescind all or any portion of any penalty imposed by this section with respect to any violation if --



6707A(d)(1)(A) the violation is with respect to a reportable transaction other than a listed transaction, and



6707A(d)(1)(B) rescinding the penalty would promote compliance with the requirements of this title and effective tax administration.



6707A(d)(2) NO JUDICIAL APPEAL. --Notwithstanding any other provision of law, any determination under this subsection may not be reviewed in any judicial proceeding.



6707A(d)(3) RECORDS. --If a penalty is rescinded under paragraph (1), the Commissioner shall place in the file in the Office of the Commissioner the opinion of the Commissioner with respect to the determination, including --



6707A(d)(3)(A) a statement of the facts and circumstances relating to the violation,



6707A(d)(3)(B) the reasons for the rescission, and



6707A(d)(3)(C) the amount of the penalty rescinded.



6707A(e) PENALTY REPORTED TO SEC. --In the case of a person --



6707A(e)(1) which is required to file periodic reports under section 13 or 15(d) of the Securities Exchange Act of 1934 or is required to be consolidated with another person for purposes of such reports, and



6707A(e)(2) which --



6707A(e)(2)(A) is required to pay a penalty under this section with respect to a listed transaction,



6707A(e)(2)(B) is required to pay a penalty under section 6662A with respect to any reportable transaction at a rate prescribed under section 6662A(c), or



6707A(e)(2)(C) is required to pay a penalty under section 6662(h) with respect to any reportable transaction and would (but for section 6662A(e)(2)(B)) have been subject to penalty under section 6662A at a rate prescribed under section 6662A(c),



the requirement to pay such penalty shall be disclosed in such reports filed by such person for such periods as the Secretary shall specify. Failure to make a disclosure in accordance with the preceding sentence shall be treated as a failure to which the penalty under subsection (b)(2) applies.



6707A(f) COORDINATION WITH OTHER PENALTIES. --The penalty imposed by this section shall be in addition to any other penalty imposed by this title.


.01 Added by P.L. 108-357. Amended by P.L. 110-172 (clerical amendment). For details, see the Code Volumes.



If you need guidance on problematical positions, contact us at ab@irstaxattorney.com This statute is a trap for the unwary tax return preparer. Let us know if you want us to upload some "reportable" and "listed" transactions that have been published by the IRS

6707 and 6707A penalties for return preparers

If a return preparer is a "material advisor, the very large penalties described below may apply. Brace yourself!

Sec. 6111(b)(1)(A) defines a material advisor as any person:
(1) who provides any material aid, assistance, or advice with respect to organizing, managing, promoting, selling, implementing, insuring, or carrying out any reportable transaction, and

(2) who directly or indirectly derives gross income in excess of a “threshold amount”(or such other amount as may be prescribed by the Secretary) for such aid, assistance, or advice.

There is little question that return preparers can be viewed by the IRS as providing "advice" and "assistance" to clients. Obviously, preparing a tax return is "assistance" and any communication with a client can be viewed as "advice."
A client can use the prepared tax return as a marketing tool, arguably facilitated by the return preparer. Remember that IRS examiners are aggressive. The examiners assigned to tax shelter cases are not only extraordinarly aggressive, they look for fraud issues in the tax return (e.g., filing a false statement).

6707(a) pertains to a person who is required to file a return under section 6111(a) with respect to any reportable transaction, fails to file such return on or before the date prescribed therefor, or files false or incomplete information with the Secretary with respect to such transaction, such person shall pay a penalty with respect to such return in the amount determined under subsection (b).

6707(b) notes that failure to file will result in a penalty of $50,000. However, the penalty for any listed transaction shall be an amount equal to the greater of $200,000, or 50% of the gross income derived by such person with respect to aid, assistance, or advice which is provided with respect to the listed transaction before the date the return is filed under section 6111. For an intentional failure 75% will be substituted for 50%.

Sec. 6707A(a) --Any person who fails to include on any return or statement any information with respect to a reportable transaction which is required under section 6011 to be included with such return or statement shall pay a penalty in the amount determined under subsection (b).

Sec. 6707A(b)(1) - the amount of the penalty under subsection shall be $10,000 in the case of a natural person, and $50,000 in any other case.

Sec. 6707A(b)(2) listed transactions The amount of the penalty under subsection (a) with respect to a listed transaction shall be $100,000 in the case of a natural person, and $200,000 in any other case.

Sec. 6707A(c)(1) - The term "reportable transaction" means any transaction with respect to which information is required to be included with a return or statement because, as determined under regulations prescribed under section 6011, such transaction is of a type which the Secretary determines as having a potential for tax avoidance or evasion.

Sec. 6707A(c)(2) - The term "listed transaction" means a reportable transaction which is the same as, or substantially similar to, a transaction specifically identified by the Secretary as a tax avoidance transaction for purposes of section 6011.

The clear language of 6111 and its underlying regulations will facilitate the above penalties under 6707 and 6707A in addition to 6694 penalties.

How can return preparers avoid the 6707 and 6707A penalties? The answer is simple: either stay away from these transactions or report them to the IRS under the IRS procedures without supporting the transaction.

If you have any doubt about the transaction, get the opinion of an independant tax attorney (one who is not associated, directly or indirectly, with the reportable transaction.

The Department of Justice web page is loaded with prosecutions of return preparers who have been directly or indirectly involved with tax shelter transaction that would meet the definition of reportable or listed transactions.

Send an e-mail to ab@irstaxattorney.com if you have any questions about any transaction that gives you some concern. Beware of any transaction that may have the effect of "tax avoidance."

Return Preparer 6707 and 6707A penalties

The 6707 penalty is $50,000 for the failure to file a retun under 6111(a)for a "reportable transactin." For failure to file a return under 6111 of a "listed transaction", the penalty will be at least $200,000.

New 6694 penalty uploaded

The home page for this blog, www.section6694penalty.com, has an upload of an article published by the Enrolled Agent Journal called "The Devil is in the Details."

It should be read because it outlines the new paradigm caused by the draconian penalties under 6694 and the extreme difficulty for return preparaers to provide technical support for positions taken in tax returns. If you want a "reality check," read that article.

I suggest you download the article and pass it on to associates in the return preparation industry.

Although there is a large and growing following of this Blog and ongoing growth in those who log onto this web page, the questions have come into ab@irstaxattorney.com. It would be better to raise questions in reply to any of the blogs. It is perfectly fine to disagree with any statement or interpretation of the proposed regulations. Opposing analysis is welcome.

As it is, there are many interpretative issues that pertain to section 6694.


For those who have requested seminars, continue to send them to ab@irstaxattorney.com

Electronic filing requirements for 2008

Rev. Proc. 2008-30, I.R.B. 2008-23, 1056, June 9, 2008.

TABLE OF CONTENTS


Part A. General


SEC. 1. PURPOSE

SEC. 2. NATURE OF CHANGES --CURRENT YEAR (TAX YEAR 2008)

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

SEC. 4. FILING REQUIREMENTS

SEC. 5. VENDOR LIST

SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS ELECTRONICALLY

SEC. 7. RETENTION REQUIREMENTS AND DUE DATES

SEC. 8. CORRECTED RETURNS

SEC. 9. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS

SEC. 10. COMBINED FEDERAL/STATE FILING PROGRAM

SEC. 11. PENALTIES ASSOCIATED WITH INFORMATION RETURNS

SEC. 12. STATE ABBREVIATIONS


Part B. Electronic Filing Specifications


SEC. 1. GENERAL

SEC. 2. ELECTRONIC FILING APPROVAL PROCEDURE

SEC. 3. TEST FILES

SEC. 4. ELECTRONIC SUBMISSIONS

SEC. 5. PIN REQUIREMENTS

SEC. 6. ELECTRONIC FILING SPECIFICATIONS

SEC. 7. CONNECTING TO THE FIRE SYSTEM

SEC. 8. COMMON PROBLEMS AND QUESTIONS


Part C. Record Format Specifications and Record Layouts


SEC. 1. GENERAL

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

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

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

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

SEC. 6. PAYEE "B" RECORD --GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS
(1) Payee "B" Record --Record Layout Positions 544-750 for Form 1098

(2) Payee "B" Record --Record Layout Positions 544-750 for Form 1098-C

(3) Payee "B" Record --Record Layout Positions 544-750 for Form 1098-E

(4) Payee "B" Record --Record Layout Positions 544-750 for Form 1098-T

(5) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-A

(6) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-B

(7) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-C

(8) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-CAP

(9) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-DIV

(10) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-G

(11) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-H

(12) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-INT

(13) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-LTC

(14) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-MISC

(15) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-OID

(16) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-PATR

(17) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-Q

(18) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-R

(19) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-S

(20) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-SA

(21) Payee "B" Record --Record Layout Positions 544-750 for Form 5498

(22) Payee "B" Record --Record Layout Positions 544-750 for Form 5498-ESA

(23) Payee "B" Record --Record Layout Positions 544-750 for Form 5498-SA

(24) Payee "B" Record --Record Layout Positions 544-750 for Form W-2G

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

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

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

SEC. 10. FILE LAYOUT DIAGRAM


Part D. Extensions of Time and Waivers


SEC. 1. GENERAL --EXTENSIONS

SEC. 2. SPECIFICATIONS FOR FILING EXTENSIONS OF TIME ELECTRONICALLY

SEC. 3. RECORD LAYOUT --EXTENSION OF TIME

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

SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ELECTRONICALLY


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

Enterprise Computing Center --Martinsburg

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. This Revenue Procedure must be used for the preparation of Tax Year 2008 information returns and information returns for tax years prior to 2008 filed beginning January 1, 2009. Specifications for filing the following forms are contained in this Revenue Procedure.
(a) Form 1098, Mortgage Interest Statement

(b) Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

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

(d) Form 1098-T, Tuition Statement

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

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

(g) Form 1099-C, Cancellation of Debt

(h) Form 1099-CAP, Changes in Corporate Control and Capital Structure

(i) Form 1099-DIV, Dividends and Distributions

(j) Form 1099-G, Certain Government Payments

(k) Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments

(l) Form 1099-INT, Interest Income

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

(n) Form 1099-MISC, Miscellaneous Income

(o) Form 1099-OID, Original Issue Discount

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

(q) Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530)

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

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

(t) Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

(u) Form 5498, IRA Contribution Information

(v) Form 5498-ESA, Coverdell ESA Contribution Information

(w) Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information

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

.02 All data received at IRS/ECC-MTB for processing will be given the same protection as individual income tax returns (Form 1040). IRS/ECC-MTB 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 Statement, electronically are only available from the Social Security Administration (SSA). Filers can call 1-800-SSA-6270 to obtain the telephone number of the SSA Employer Service Liaison Officer for their area.

.04 IRS/ECC-MTB does not process Forms W-2. Paper and/or electronic filing of Forms W-2 must be sent to SSA. IRS/ECC-MTB does, however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W-2 as well as 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; however, if discrepancies occur, the instructions in this Revenue Procedure must be followed.

.06 This Revenue Procedure also provides the requirements and specifications for electronic 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) 2008 General Instructionsfor Forms 1099, 1098, 5498, and W-2G and individual form instructions.

(b) Publication 1179, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W-2G, and 1042-S.

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

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

.08 This Revenue Procedure supersedes Rev. Proc. 2007-51 published as Publication 1220 (Rev. 6-2007), Specifications for Filing Forms 1098, 1099, 5498, and W-2G Electronically or Magnetically.



Sec. 2. Nature of Changes-Current Year (Tax Year 2008)

.01 In this publication, all pertinent changes for Tax Year 2008 are emphasized by the use of italics. Portions of text that require special attention are in boldface text. Filers are always encouraged to read the publication in its entirety.



a. General
(1) IRS/ECC-MTB no longer accepts any form of magnetic media. Electronic filing through the FIRE System is the only method to report information returns to IRS/ECC-MTB.

(2) Form 4804, Transmittal of Information Returns Reported Magnetically, is obsolete. This form was only required for magnetic media reporting which is no longer a valid method of reporting information returns.

(3) Several sections have been deleted due to the elimination of magnetic media filing and others combined for greater clarity. Please review the entire Publication for all relevant changes.

(4) A toll-free fax number, 877-477-0572, was added to Part A, Sec. 03.



b. Programming Changes
(1) For all Forms, Payment Year, Field Positions 2-5, for the Transmitter "T" Record, Payer "A" Record and Payee "B" Record must be incremented to update the four-digit reporting year (2007 to 2008), unless reporting prior year data.

(2) In the Transmitter "T" Record, two fields, Cartridge Tape File Indicator, positions 409-410 and Transmitter's Media Number, positions 411-416, were deleted. These positions are now blank.

(3) In the Payee "B" Record for Form 1099-CAP, Shareholder Indicator, position 627 was deleted.

(4) For Form 1099-R, the distribution code H was added and new distribution code combinations are allowed. See Form 1099-R Distribution Code Chart 2008 for acceptable combinations.

(5) The requirement for filing Form 8809, Application for Extension of Time To File Information Returns, electronically was reduced from 50 payers to 10 payers. See Part D.



Sec. 3. Where To File and How to Contact the IRS, Enterprise Computing Center --Martinsburg

.01 All information returns filed electronically are processed at IRS/ECC-MTB. General inquiries concerning the filing of information returns should be sent to the following address:
IRS-Enterprise Computing Center --Martinsburg

Information Reporting Program

230 Murall Drive

Kearneysville, WV 25430

.02 All requests for an extension of time to file information returns with IRS/ECC-MTB filed on Form 8809 or request for an extension to provide recipient copies, and requests for undue hardship waivers filed on Form 8508 should be sent to the following address:
IRS-Enterprise Computing Center --Martinsburg

Information Reporting Program

Attn: Extension of Time Coordinator

240 Murall Drive

Kearneysville, WV 25430

.03 The telephone numbers and web addresses for questions about specifications for electronic submissions are:

Information Reporting Program Customer Service Section

TOLL-FREE 1-866-455-7438 or outside the U.S. 1-304-263-8700

e-mail at mccirp@irs.gov

304-267-3367 --TDD

(Telecommunication Device for the Deaf)

Fax Machine

Toll-free within the U.S. --877-477-0572

Outside the U.S. --304-264-5602

Electronic Filing --FIRE System

http://fire.irs.gov

TO OBTAIN FORMS:

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

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

Note: Because paper forms are scanned during processing, you cannot use forms printed from the IRS website to file Form 1096, and Copy A of Forms 1098, 1099, or 5498 with the IRS.

.04 The 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G are included in the Publication 1220 for your convenience. 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 filing by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676) or ordering online from the IRS website at www.irs.gov.

.06 Questions pertaining to electronic filing of Forms W-2 must be directed to the Social Security Administration (SSA). Filers can call 1-800-772-6270 to obtain the telephone number of the SSA Employer Service Liaison Officer for their area.

.07 Payers should not contact IRS/ECC-MTB 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 telephone number for contact purposes; or the payer may be instructed to respond in writing to the address provided. IRS/ECC-MTB does not issue penalty notices and does not have the authority to abate penalties. For penalty information, refer to the Penalties section of the 2008 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 of Tax Return, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800-829-3676). For questions regarding this form, call 1-800-829-1040.

.09 Electronic Products and Services Support, Information Reporting Branch, Customer Service Section (IRB/CSS), answers electronic, paper filing, and tax law questions from the payer community relating to the correct preparation and filing of business information returns (Forms 1096, 1098, 1099, 5498, 8027, and W-2G). IRB/CSS also answers questions about the electronic filing of Forms 1042-S and the tax law and paper filing instructions for Forms W-2 and W-3. Inquiries pertaining to Notices CP2100 and 972CG, backup withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers (TINS) are also addressed by IRB/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 Standard Time, by calling toll-free 1-866-455-7438. IRB/CSS also offers an e-mail address for transmitters and electronic filers of information returns. The address is mccirp@irs.gov. When sending e-mails concerning specific file information, you must include the company name and the electronic filename or Transmitter Control Code. Please do not submit TINS or attachments, because electronic mail is not secure and the information may be compromised. 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 IRB/CSS cannot advise filers where to send state copies of paper forms. Filers must contact the Tax Department in the state where the recipient resides to obtain the correct address and filing requirements.

.11 Form 4419, Application for Filing Information Returns Electronically, Form 8809, Application for Extension of Time To File Information Returns, and Form 8508, Request for Waiver From Filing Information Returns Electronically, may be faxed to IRS/ECC-MTB toll-free at 877-477-0572.



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. 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.

.02 All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification Number (TIN), which may be either a Social Security Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN). 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 The following requirements apply separately to both originals and corrections filed electronically:


____________________________________________________________________________________
1098

1098-C 250 or more of any of these forms require electronic filing with IRS.
These are stand-alone documents

1098-E and may not be aggregated for purposes of determining the 250
threshold. For example, if you must

1098-T file 100 Forms 1099-B and 300 Forms 1099-INT, Forms 1099-B need not be
filed electronically since

1099-A they do not meet the threshold of 250. However, Forms 1099-INT must be
filed electronically since

1099-B they meet the threshold of 250.

1099-C

1099-CAP

1099-DIV

1099-G

1099-H

1099-INT

1099-LTC

1099-MISC

1099-OID

1099-PATR

1099-Q

1099-R

1099-S

1099-SA

5498

5498-ESA

5498-SA

W-2G

____________________________________________________________________________________


.04 The above requirements do not apply if the payer establishes undue hardship (See Part D, Sec. 5).



Sec. 5. Vendor List

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

.02 If filers engage a service bureau to prepare files on their behalf, the filers must not also report this data, as it will create a duplicate filing situation which may cause penalty notices to be generated.

.03 The Vendor List, Publication 1582, is updated periodically. The most recent revision is available on the IRS website at www.irs.gov. For an additional list of software providers, log on to www.irs.gov and go to the Approved IRS e-file for Business Providers link.

.04 A vendor, who offers a software package, or has the capability to electronically file information returns for customers, and who would like to be included in Publication 1582 must submit a letter or e-mail to IRS/ECC-MTB. The request should include:
(a) Company name

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

(c) Telephone and FAX number (include area code)

(d) E-mail address

(e) Contact person

(f) Website

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

(h) Method of filing (only electronic filing is acceptable)

(i) Type(s) of return(s)



Sec. 6. Form 4419, Application for Filing Information Returns Electronically

.01 Transmitters are required to submit Form 4419, Application for Filing Information Returns Electronically, to request authorization to file information returns with IRS/ECC-MTB. A single Form 4419 should be filed no matter how many types of returns the transmitter will be submitting electronically. 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) will be filed, the transmitter should not 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, and Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. See the back of Form 4419 for detailed instructions.

.02 Electronically filed returns may not be submitted to IRS/ECC-MTB until the application has been approved. Please read the instructions on the back of Form 4419 carefully. 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 website 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/ECC-MTB uses the TCC to identify payers/transmitters and to track their files through the processing system.

.04 IRS/ECC-MTB 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. Transmitters cannot use more than one TCC in a file. Each TCC must be reported in separate transmissions.

.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/ECC-MTB for the payer. Other service bureaus will prepare the file and return the file to the payer for submission to IRS/ECC-MTB. These service bureaus may require the payer to obtain a TCC, which is coded in the Transmitter "T" Record. Payers should contact their service bureau for further information.

.06 Form 4419 may be submitted anytime during the year; however, it must be submitted to IRS/ECC-MTB at least 15 days before the due date of the return(s) for current year processing. This allows IRS/ECC-MTB the time necessary to process and respond to applications. Form 4419 may be faxed to IRS/ECC-MTB toll-free at 877-477-0572. In the event that computer equipment or software is not compatible with IRS/ECC-MTB, a waiver may be requested to file returns on paper documents (See Part D, Sec. 5).

.07 Once a transmitter is approved to file electronically, it is not necessary to reapply unless:
(a) The payer has discontinued filing electronically for two consecutive years. The payer's TCC may have been reassigned by IRS/ECC-MTB. Payers who know that the assigned TCC will no longer be used, are requested to notify IRS/ECC-MTB so these numbers may be reassigned.

(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/ECC-MTB 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. 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 should be submitted. One TCC may be used for all departments.

.09 Copies of Publication 1220 can be obtained by downloading from the IRS website at www.irs.gov.

.10 If any of the information (name, TIN or address) on Form 4419 changes, please notify IRS/ECC-MTB in writing so the IRS/ECC-MTB database can be updated. The e-mail address, mccirp@irs.gov, may be used for these changes. The transmitter should include the TCC in all correspondence.

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



Sec. 7. Retention Requirements and Due Dates

.01 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, except:
(a) Retain for 4 years all information returns when backup withholding is imposed.

(b) 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.

.02 Filing of information returns is on a calendar year basis, except for Forms 5498 and 5498-ESA, which are used to report amounts contributed during or after the calendar year (but no later than April 15). The following due dates will apply to Tax Year 2008:


Due Dates



_____________________________________________________________________________________
Forms 1098, 1099, and W-2G Forms 5498*, 5498-SA and 5498-ESA

Recipient Copy --February 2, 2009 IRS Copy --June 1, 2009

IRS Copy --March 31, 2009 Forms 5498 and 5498-SA Participant Copy --June 1,
2009

Form 5498-ESA Participant Copy --April 30, 2009

* Participants' copies of Forms 5498 to furnish

fair market value information --February 2, 2009

_____________________________________________________________________________________


.03 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.



Sec. 8. Corrected Returns
 A correction is an information return submitted by the transmitter to correct an information return that was previously submitted to and successfully processed by IRS/ECC-MTB, but contained erroneous information.

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

 DO NOT SEND YOUR ENTIRE FILE AGAIN. Only correct the information returns which were erroneous.

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

 Be sure to use the same payee account number that was used on the original submission. The account number is used to match a correction record to the original information return.

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

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


E

X If a payer has 100 Forms 1099-A to be corrected, they can be filed on paper
because they fall under the 250

A threshold. However, if the payer has 300 Forms 1099-B to be corrected, they
must be filed electronically

M because they meet the 250 threshold. If for some reason a payer cannot file the
300 corrections electronically,

P to avoid penalties, a request for a waiver must be submitted before filing on
paper. If a waiver is approved for

L original documents, any corrections for the same type of return will be covered
under this waiver.

E



.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 Penalties section of the 2008 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 require correction.

.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 The payee's account number should be included on all correction records. This is especially important when more than one information return of the same type is reported for a payee. The account number is used to determine which information return is being corrected. It is vital that each information return reported for a payee have a unique account number. See Part C, Sec. 6, Payer's Account Number For Payee.

.05 Corrected returns may be included on the same transmission as original returns; however, separate "A" Records are required. 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.

.06 If a payer realizes duplicate reporting has occurred, IRS/ECC-MTB should be contacted immediately for instructions on how to avoid notices. The standard correction process will not resolve duplicate reporting.

.07 If a payer discovers errors that affect a large number of payees, in addition to sending IRS the corrected returns and notifying the payees, IRS/ECC-MTB underreporter section should be contacted toll-free 1-866-455-7438 for additional requirements. Corrections must be submitted on actual information return documents or filed electronically.

.08 Prior year data, original and corrected, must be filed according to the requirements of this Revenue Procedure. When submitting prior year data, use the record format for the current year. Each tax year must be electronically filed in separate transmissions. However, use the actual year designation of the data in Field Positions 2-5 of the "T", "A", and "B" Records. Field position 6, Prior Year Data Indicator, in the Transmitter "T" Record must contain a "P". If filing electronically, a separate transmission must be made for each tax year.

.09 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).

.10 All paper returns, whether original or corrected, must be filed with the appropriate service center. IRS/ECC-MTB does not process paper returns.

.11 If a payer discovers an error(s) in reporting the payer (not recipient) name and/or TIN, write a letter to IRS/ECC-MTB (See Part A, Sec. 3) containing the following information:
(a) Name and address of payer

(b) Type of error (please include the incorrect payer name/TIN that was reported)

(c) Tax year

(d) Payer TIN

(e) TCC

(f) Type of return

(g) Number of payees

(h) Filing method, paper or electronic

.12 The "B" Record provides a 20-position field for a unique Payer's Account Number for Payee. If a payee has more than one reporting of the same document type, it is vital that each reporting is assigned a unique account number. 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.

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

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


____________________________________________________________________________________
Guidelines for Filing Corrected Returns Electronically

____________________________________________________________________________________
One transaction is required to make the following corrections properly. (See Note
5.)

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

____________________________________________________________________________________
ERROR TYPE 1 CORRECTION

____________________________________________________________________________________
1. Original return was filed with one or A. Prepare a new file. The first record
more of the following errors: on the file will be the Transmitter
"T" Record.




(a) Incorrect payment amount codes in B. Make a separate "A" Record for each
the Payer "A" type of return

Record and each payer being reported. Payer
information in

(b) Incorrect payment amounts in the the "A" Record must be the same as it
Payee "B" was in the

Record original submission.




(c) Incorrect code in the C. The Payee "B" Records must show the
distribution code field in correct record

Payee "B" Record information as well as a Corrected
Return Indicator

(d) Incorrect payee address (See Note Code of "G" in Field Position 6.
3.)

(e) Incorrect payee indicator (See
Note 1.)

(f) Incorrect payee name (See Notes 2 D. Corrected returns using "G" coded "B"
& 3.) Records may

(g) Return should not have been filed be on the same file as those returns
submitted without

the "G" coded "B" Records; however,
separate "A"

Note 1: Payee indicators are Records are required.
non-money amount

indicator fields located in the E. Prepare a separate "C" Record for
specific form record each type of return

layouts of the Payee "B" Record and each payer being reported.
between field

positions 544-748.

F. The last record on the file will be
the End of

Transmission "F" Record.

Note 2: For information on errors to
the payer's name and TIN (See Part A,
Sec. 8, .11).




Note 3: To correct a TIN and/or payee
name and address follow the
instructions under Error Type 2.

____________________________________________________________________________________

File layout one step corrections



__________________________________________________________________________________
Transmitter Payer "A" "G" coded "G" coded End of Payer End of
"T" Record Record Payee "B" Payee "B" "C" Record Transmission
Record Record "F" Record

__________________________________________________________________________________



____________________________________________________________________________________
Guidelines for Filing Corrected Returns Electronically (Continued)

____________________________________________________________________________________
Two (2) separate transactions are required to make the following corrections
properly. Follow the directions for both Transactions 1 and 2. (See Note 5.) DO NOT
use the two step correction process to correct money amounts.

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

____________________________________________________________________________________
ERROR TYPE 2 CORRECTION

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




(a) No payee TIN (SSN, EIN, ITIN, A. Prepare a new file. The first record
QI-EIN) on the file will be

(b) Incorrect payee TIN the Transmitter "T" Record.

(c) Incorrect payee name and address B. Make a separate "A" Record for each
type of return

(d) Wrong type of return indicator and each payer being reported. The
information in the

"A" Record will be exactly the same
as it was in the

Note 4: The Record Sequence Number original submission. (See Note 4.)
will be

different since this is a counter
number and is

unique to each file. For 1099-R C. The Payee "B" Records must contain
corrections, if the exactly the

corrected amounts are zeros, certain same information as submitted
indicators will previously, except,

not be used. insert a Corrected Return Indicator
Code of "G" in

Field Position 6 of the "B" Records,
and enter "0"

(zeros) in all payment amounts. (See
Note 4.)




D. Corrected returns 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.




E. Prepare a separate "C" Record for
each type of return and each payer
being reported.




F. 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.




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/ECC-MTB 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.

____________________________________________________________________________________
Note 5: See the 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G for
additional information on regulations affecting corrections and related penalties.

____________________________________________________________________________________

File layout two step corrections



__________________________________________________________________________________
Transmitter Payer "A" "G" coded "G" coded End of Payer Payer "A" Record
"T" Record Record Payee "B" Payee "B" "C" Record
Record Record

__________________________________________________________________________________



____________________________________________________________________________________
"C" coded Payee "B" "C" coded Payee "B" End of Payer "C" End of Transmission
Record Record Record "F" Record

____________________________________________________________________________________


Note 6: If a filer is reporting "G" coded, "C" coded, and/or "Non-coded" (original) returns on the same file, each category must be reported under separate "A" Records.



Sec. 9. Effect on Paper Returns and Statements to Recipients

.01 Electronic 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/ECC-MTB for any forms filed electronically. 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 2008 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, General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, W-2G and 1042-S.



Sec. 10. Combined Federal/State Filing Program
 Through the Combined Federal/State Filing (CF/SF) Program, IRS/ECC-MTB will forward original and corrected information returns filed electronically to participating states for approved filers.

 For approval, the filer must submit a test file coded for this program. See Part B, Sec. 3, Test Files.

 Approved filers are sent Form 6847, Consent for Internal Revenue Service to Release Tax Information, which must be completed and returned to IRS/ECC-MTB. A separate form is required for each payer. This form does not have to be filed every year, only when payer information changes.

.01 The Combined Federal/State Filing (CF/SF) Program was established to simplify information returns filing for the taxpayer. IRS/ECC-MTB will forward this information to participating states free of charge for approved filers. Separate reporting to those states is not required. 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 Contribution Information



.02 To request approval to participate, an electronic test file coded for this program must be submitted to IRS/ECC-MTB between November 1, 2008, and February 15, 2009.

.03 If the test file is coded for the Combined Federal/State Filing Program and is acceptable, an approval letter and Form 6847, Consent for Internal Revenue Service to Release Tax Information, will be sent to the filer.

.04 Form 6847, Consent for Internal Revenue Service to Release Tax Information, must be completed and signed by the payer, and returned to IRS/ECC-MTB before any tax information can be released to the state. Filers must write their TCC on Form 6847.

.05 While a test file is only required for the first year when a filer applies to participate in the Program, it is highly recommended that a test be sent every year you participate in the Combined Federal/State Filing program. Each record, both in the test and the actual data file, must conform to the current Revenue Procedure.

.06 Within 1-2 days after your file has been sent, you will be notified via e-mail as to the acceptability of your file if you provide a valid e-mail address on the "Verify Your Filing Information" screen. If you are using e-mail filtering software, configure your software to accept e-mail from fire@irs.gov and irs.e-helpmail@irs.gov. If the file is bad, the filer must return to http://fire.irs.gov to determine what the errors are in the file by clicking on CHECK FILE STATUS. If the test file was unacceptable a new file can be transmitted up to February 15, 2009.

.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 on the original form, or it may be photocopied. If 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 If a payee has a reporting requirement for more than one state, separate "B" records must be created for each state. Payers must pro-rate the amounts to determine what should be reported to each state. Do not report the total amount to each state. This will cause duplicate reporting.

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

.11 All corrections properly coded for the Combined Federal/State Filing Program will be forwarded to the participating states. Only send corrections which affect the Federal reporting. Errors which apply only to the state filing requirement should be sent directly to the state.

.12 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.

.13 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.

.14 Upon submission of the actual files, the transmitter must be sure of the following:
(a) All records are coded exactly as required by this Revenue Procedure.

(b) A State Total "K" Record(s) for each state(s) being reported follows the "C" Record.

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

(d) The last "K" Record is 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 State Code

__________________________________________________________________________________
Alabama 01 Indiana 18 Nebraska 31

Arizona 04 Iowa 19 New Jersey 34

Arkansas 05 Kansas 20 New Mexico 35

California 06 Louisiana 22 North Carolina 37

Colorado 07 Maine 23 North Dakota 38

Connecticut 08 Maryland 24 Ohio 39

Delaware 10 Massachusetts 25 South Carolina 45

District of
Columbia 11 Minnesota 27 Utah 49

Georgia 13 Mississippi 28 Virginia 51

Hawaii 15 Missouri 29 Wisconsin 55

Idaho 16 Montana 30

__________________________________________________________________________________
* The codes listed above are correct for the IRS Combined Federal/State Filing
Program and may not correspond to the state codes of other agencies or programs.




Sample File Layout for Combined Federal/State Filer



__________________________________________________________________________________
Transmitter Payer "A" Payee "B" Payee "B" Payee "B" End of Payer "C"
"T" Record Record coded Record with Record with Record, no Record
with 1 in state code state code state code
position 26 15 in 06 in
positions positions
747-748 747-748

__________________________________________________________________________________



____________________________________________________________________________________
State Total "K" Record for State Total "K" Record for End of Transmission "F"
"B" records coded 15. "K" "B" records coded 06. "K" Record
record coded 15 in record coded 06 in
positions 747-748. positions 747-748.

____________________________________________________________________________________




Sec. 11. Penalties Associated With Information Returns

.01 The following penalties generally apply to the person required to file information returns. The penalties apply to electronic 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 electronically, 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. 7.02); 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 transmitted by the required date. See Part B, Sec. 4 .06, for more information on replacement files.

.04 Intentional disregard of filing requirements. If 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 2008 General Instructions for Forms 1099, 1098, 5498, and W-2G.



Sec. 12. 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 State Code

__________________________________________________________________________________
Alabama AL Kentucky KY No. Mariana Islands MP

Alaska AK Louisiana LA Ohio OH

American Samoa AS Maine ME Oklahoma OK

Arizona AZ Marshall Islands MH Oregon OR

Arkansas AR Maryland MD Pennsylvania PA

California CA Massachusetts MA Puerto Rico PR

Colorado CO Michigan MI Rhode Island RI

Connecticut CT Minnesota MN South Carolina SC

Delaware DE Mississippi MS South Dakota SD

District of Columbia DC Missouri MO Tennessee TN

Federated States of
Micronesia FM Montana MT Texas TX

Florida FL Nebraska NE Utah UT

Georgia GA Nevada NV Vermont VT

Guam GU New Hampshire NH Virginia VA

(U.S.) Virgin
Hawaii HI New Jersey NJ Islands VI

Idaho ID New Mexico NM Washington WA

Illinois IL New York NY West Virginia WV

Indiana IN North Carolina NC Wisconsin WI

Iowa IA North Dakota ND Wyoming WY

Kansas KS

__________________________________________________________________________________


.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.




Part B. Electronic Filing Specifications


Note: The FIRE System DOES NOT provide fill-in forms, except for Form 8809, Application for Extension of Time To File Information Returns. Filers must program files according to the Record Layout Specifications contained in this publication. For a list of software providers, log on to www.irs.gov and go to the Approved IRS e-file for Business Providers link. Also, see Part A, Sec. 5.03.



Sec. 1. General

.01 Electronic filing of Forms 1098, 1099, 5498, and W-2G information returns, originals, corrections, and replacements is the method of filing for payers who meet the 250 returns filing requirement. Payers who are under the filing threshold requirement, are encouraged to file electronically.

.02 All electronic filing of information returns are received at IRS/ECC-MTB via the FIRE (Filing Information Returns Electronically) System. To connect to the FIRE System, point your browser to http://fire.irs.gov. The system is designed to support the electronic filing of information returns only.

.03 The electronic filing of information returns is not affiliated with any other IRS electronic filing programs. Filers must obtain separate approval to participate in each program. Only inquiries concerning electronic filing of information returns should be directed to IRS/ECC-MTB.

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

.05 See Part C, Record Format Specifications and Record Layouts.

.06 Form 8809, Application for Extension of Time To File Information Returns, is available as a fill-in form via the FIRE System. If you do not already have a User ID and password refer to Section 7. At the Main Menu, click "Extension of Time Request" and then click "Fill-in Extension Form". This option is only used to request an automatic 30-day extension and must be completed by the due date of the return for each payer requesting an extension. Print the approval page for your records. Refer to Part D for additional details.



Sec. 2. Electronic Filing Approval Procedure

.01 Filers must obtain a Transmitter Control Code (TCC) prior to submitting files electronically. 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 user ID, password and PIN (Personal Identification Number) and do not need prior or special approval. See Part B, Sec. 5, 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, filers who forget their password or PIN, can call toll-free 1-866-455-7438 for assistance. The FIRE System may require users to change their passwords on a yearly basis. However, users can change their passwords at any time from the Main Menu.



Sec. 3. 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 2008 (returns to be filed in 2009), it must be submitted to IRS/ECC-MTB no earlier than November 1, 2008, and no later than February 15, 2009.

.02 IRS/ECC-MTB encourages first time electronic filers to submit a test. Test files are required for filers wishing to participate in the Combined Federal/State Filing Program. See Part A, Sec. 10, for further information on the Combined Federal/State Filing Program.

.03 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

(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 C for record formats.)

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

.05 IRS/ECC-MTB 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.

.06 Filers who encounter problems while transmitting the electronic test file can contact IRS/ECC-MTB toll-free 1-866-455-7438 for assistance.

.07 Within 1-2 days after your file has been sent, you will be notified via e-mail as to the acceptability of your file if you provide a valid e-mail address on the "Verify Your Filing Information" screen. If you are using e-mail filtering software, configure your software to accept e-mail from fire@irs.gov and irs.e-helpmail@irs.gov. If the file is bad, the filer must return to http://fire.irs.gov to determine what the errors are in the file by clicking on CHECK FILE STATUS. If your results indicate:
(a) "Good, Federal Reporting" --Your test file is good for federal reporting only. Click on the filename for additional details.

(b) "Good, Federal/State Reporting" --Your file is good for the Combined Federal and State Filing Program (see Part A, Section 10, for further details). Click on the filename for additional details.

(c) "Bad" --This means that your test file contained errors. Click on the filename for a list of the errors. If you want to send another test file, send it as a test (not a replacement, original or correction).

(d) "Not Yet Processed" --The file has been received, but we do not have results available yet. Please allow another day for results.



Sec. 4. Electronic Submissions

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

.02 The FIRE System will be down from 2 p.m. EST December 22, 2008, through January 4, 2009. This allows IRS/ECC-MTB to update its system to reflect current year changes.

.03 If you are sending files larger than 10,000 records electronically, data compression is encouraged. When transmitting files larger than 5 million records, please contact IRS/ECC-MTB for additional information. WinZip and PKZIP are the only acceptable compression packages. IRS/ECC-MTB cannot accept self-extracting zip files or compressed files containing multiple files. The time required to transmit information returns electronically will vary depending upon the type of connection to the Internet and if data compression is used. The time required to transmit a file can be reduced up to 95 percent by using compression.

.04 The FIRE System can accept multiple files for the same type of return providing duplicate data is not transmitted. For example, if your company has several branches issuing 1099-INT forms, it is not necessary to consolidate all the forms into one transmission. Each file may be sent separately, providing duplicate data is not transmitted.

.05 Transmitters may create files using self assigned file name(s). Files submitted electronically will be assigned a new unique file name by the FIRE System. 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 IRS/ECC-MTB to identify the file, if assistance is required.

.06 If a file was submitted timely and is bad, the filer will have up to 60 days from the day the file was transmitted to transmit an acceptable file. If an acceptable file is not received within 60 days, the payer could be subject to late filing penalties. This only applies to files originally submitted electronically.

.07 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/ECC-MTB, 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 the CHECK FILE STATUS option on the FIRE System indicated the original/correction 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/ECC-MTB as a "Replacement" file unless the CHECK FILE STATUS option on the FIRE System indicates the file is bad.

.08 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. 5. PIN Requirements

.01 The user will be prompted to create a PIN consisting of 10 numerics when establishing their initial logon name and password.

.02 The PIN is required each time an ORIGINAL, CORRECTION, or REPLACEMENT file is sent electronically and is permission to release the file. It is not needed for a TEST 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.

.03 If the file is good, it is released for mainline processing after 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, follow normal replacement procedures.



Sec. 6. Electronic Filing Specifications

.01 The FIRE System is designed exclusively for the filing of Forms 1042-S, 1098, 1099, 5498, 8027, and W-2G.

.02 A transmitter must have a TCC (see Part A, Sec. 6) before a file can be transmitted.

.03 After 1-2 business days, the results of the electronic transmission will be e-mailed to you providing you provide an accurate e-mail address on the "Verify Your Filing Information" screen. If you are using e-mail filtering software, configure your software to accept e-mail from fire@irs.gov and irs.e-helpmail@irs.gov. If after receiving the e-mail it indicates that your file is bad, you must log into the FIRE System and go to the CHECK FILE STATUS area of the FIRE System to determine what the errors are in your file.



Sec. 7. Connecting to the FIRE System

.01 Point your browser to http://fire.irs.gov to connect to the FIRE System.

.02 Filers should turn off their pop-up blocking software before transmitting their files.

.03 Before connecting, have your TCC and TIN available.

.04 Your browser must support SSL 128-bit encryption.

.05 Your browser must be set to receive "cookies". Cookies are used to preserve your User ID status.

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 User ID (most users logon with their first and last name).

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

Click "Create".

If you receive the message "Account Created", click "OK".

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

Click "Submit".

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

Read the bulletin(s) and/or "Click here to continue".

Subsequent connections to The FIRE System
Click "Log On".

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

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

Read the bulletin(s) and/or "Click here to continue".

Uploading your file to the FIRE System
At Menu Options:

Click "Send Information Returns"

Enter your TCC:

Enter your TIN:

Click "Submit".

The system will then display the company name, address, city, state, ZIP Code, telephone number, contact and e-mail address. This information will be used to e-mail the transmitter regarding their transmission. Update as appropriate and/or Click "Accept".

Note: Please ensure that the e-mail is accurate so that the correct person receives the e-mail and it does not return to us undeliverable. If you are using SPAM filtering software, please configure it to allow an e-mail from fire@irs.gov and irs.e-helpmail@irs.gov.

Click one of the following:

Original File

Correction File

Test File (This option will only be available from 11/1/2008 --02/15/2009.)

Replacement File (Click on the file to be replaced.)

 Electronic Replacement (file was originally transmitted on this system) Click the file to be replaced.

 Mag Media Replacement (file was originally sent on some type of magnetic media) Enter the alpha character from the letter (L-2494) that was returned. It is located on the top right on the letter under "Refer Reply To:" For example, if the letter indicates TCC 44444A, the alpha code that would be entered is "A". Click "Submit".

Enter your 10-digit PIN (not prompted for this if a test is being sent).

Click "Submit".

Click "Browse" to locate the file and open it.

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 check back into the system in 1-2 business days using the CHECK FILE STATUS
option.

_____________________________________________________________________________________


Checking your FILE STATUS

If the correct e-mail address was provided on the "Verify Your Filing Information" screen when the file was sent, an e-mail will be sent regarding your FILE STATUS. If the results in the e-mail indicate "Good, not Released" and you agree with the "Count of Payees", then you are finished with this file. If you have any other results, please follow the instructions below.
At the Main Menu:

Click "Check File Status".

Enter your TCC:

Enter your TIN:

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 after 10 calendar days unless you contact us within this timeframe.

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

"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 "Log Out".

Close your Web Browser.



Sec. 8. Common Problems and Questions

IRS/ECC-MTB 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/ECC-MTB 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 software packages.

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

This section lists some of the problems most frequently encountered with electronic files submitted to IRS/ECC-MTB. These problems may result in IRS/ECC-MTB requesting replacement files.


_____________________________________________________________________________________
1. Discrepancy Between IRS/ECC-MTB 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 or 1099-Q. Money amounts must be all numeric,
right-justified and zero (0) fill unused positions. Do Not Use Blanks.

_____________________________________________________________________________________
2. 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.

_____________________________________________________________________________________
3. Incorrect TIN in Payer "A" Record.




The Payer's TIN reported in positions 12-20 of the "A" record must be a nine-digit
number. (Do Not Enter Hyphens.) The TIN and the First Payer Name Line provided in
the "A" record must correspond.

_____________________________________________________________________________________
4. 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.

_____________________________________________________________________________________
5. Incorrect use of Test Indicator.




When sending a test file, position 28 of the Transmitter "T" record should contain a
"T", otherwise blank fill. Do not populate this Field with a "T" if sending an
original, replacement or correction file.

_____________________________________________________________________________________
6. Incorrect Format for TINs in the Payee "B" Record.




TINs entered in positions 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.

_____________________________________________________________________________________
7. Distribution Codes for Form 1099-R Reported Incorrectly.




For Form 1099-R, there must be valid Distribution Code(s) in positions 545-546 of
the Payee "B" record. For valid codes (and combinations), see Guide to Distribution
Codes in Part C. 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.

_____________________________________________________________________________________
8. Missing Correction Indicator in Payee "B" Record.




When a file is submitted as a correction file, there must be a correction indicator,
"G" or "C" in position 6 of the Payee "B" record. See Part A, Sec. 8.

_____________________________________________________________________________________
NON-FORMAT ERRORS

_____________________________________________________________________________________
1. SPAM filters are not set to receive e-mail from fire@irs.gov and
irs.e-helpmail@irs.gov.




If you want to receive e-mails concerning your files, processing results, reminders
and notices, set your SPAM filter to receive e-mail from fire@irs.gov and
irs.e-helpmail@irs.gov.

_____________________________________________________________________________________
2. Incorrect e-mail provided.




When the "Verify Your Filing Information" screen is displayed, make sure your
correct e-mail address is listed. If not, please update with the correct e-mail
address.

_____________________________________________________________________________________
3. Transmitter does not check the FIRE System to determine why the file is bad.




The results of your file transfer are posted to the FIRE System within two business
days. If the correct e-mail address was provided on the "Verify Your Filing
Information" screen when the file was sent, an e-mail will be sent regarding your
FILE STATUS. If the results in the e-mail indicate "Good, not Released" and you
agree with the "Count of Payees", then you are finished with this file. If you have
any other results, please follow the instructions in the Check File Status option.
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/ECC-MTB within 10 calendar
days from the transmission of your file.

_____________________________________________________________________________________
4. Incorrect file is not replaced timely.




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

_____________________________________________________________________________________
5. 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.

_____________________________________________________________________________________
6. Transmitter sends a file and CHECK 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 CHECK
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 1-866-455-7438 to see if this is a possibility.

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




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

_____________________________________________________________________________________
8. File is formatted as EBCDIC.




All files submitted electronically must be in standard ASCII code.

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




When sending the file electronically, you will need to enter the TIN of the company
assigned to the TCC. When you upload the file, it will contain the TINs of the other
companies for which you are filing. This is the information that will be passed
forward.

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




Call us as soon as possible toll-free at 1-866-455-7438. 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.

_____________________________________________________________________________________



Part C. 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 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 file and contains information which is critical if it is necessary for IRS/ECC-MTB 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 C. A replacement file will be requested by IRS/ECC-MTB if the "T" Record is not present.

.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 e-mail addresses which may be case sensitive. Do not use punctuation in the name and address fields.


______________________________________________________________________________________________________________
Record Name: Transmitter "T" Record

______________________________________________________________________________________________________________
Field Position Field Title Length Description and Remarks

______________________________________________________________________________________________________________
1 Record Type 1 Required. Enter "T".

______________________________________________________________________________________________________________
2-5 Payment Year 4 Required. Enter "2008". If reporting prior year data,
report the year which applies (2006, 2007, etc.) and
set the Prior Year Data Indicator in field position 6.

______________________________________________________________________________________________________________
6 Prior Year Data 1 Required. Enter "P" only if reporting prior year data;
Indicator otherwise, enter blank. Do not enter a "P" if tax year
is 2008. (See Note.)




Note: Electronic files SENT December 21 or later must be coded with a "P". Current year processing ends in
December and programs are converted for the next processing year.

______________________________________________________________________________________________________________
7-15 Transmitter's TIN 9 Required. Enter the transmitter's nine-digit Taxpayer
Identification Number (TIN). May be an EIN or SSN.

______________________________________________________________________________________________________________
16-20 Transmitter Control 5 Required. Enter the five-character alpha/numeric
Code Transmitter Control Code (TCC) assigned by IRS/ECC-MTB.
A TCC must be obtained to file data with this program.

______________________________________________________________________________________________________________
21-27 Blank 7 Enter blanks.

______________________________________________________________________________________________________________
28 Test File Indicator 1 Required for test files only. Enter a "T" if this is a
test file; otherwise, enter a blank.

______________________________________________________________________________________________________________
29 Foreign Entity 1 Enter a "1" (one) if the transmitter is a foreign
Indicator entity. If the transmitter is not a foreign entity,
enter a blank.

______________________________________________________________________________________________________________
30-69 Transmitter Name 40 Required. Enter the name of the transmitter in the
manner in which it is used in normal business.
Left-justify and fill unused positions with blanks.

______________________________________________________________________________________________________________
70-109 Transmitter Name 40 Required. Enter any additional information that may be
(Continuation) part of the name. Left-justify information and fill
unused positions with blanks.

______________________________________________________________________________________________________________
110-149 Company Name 40 Required. Enter the name of the company to be
associated with the address where correspondence should
be sent.

______________________________________________________________________________________________________________
150-189 Company Name 40 Enter any additional information that may be part of
(Continuation) the name of the company where correspondence should be
sent.

______________________________________________________________________________________________________________
190-229 Company Mailing 40 Required. Enter the mailing address where
Address correspondence should be sent.




Note: Any correspondence relating to problem electronic files will be sent to this address.




For U.S. addresses, the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field,
respectively. Filers must adhere to the correct format for the payer city, state, and ZIP Code.




For foreign addresses, filers may use the payer city, state, and ZIP Code as a continuous 51-position field.
Enter information in the following order: city, province or state, postal code, and the name of the country.
When reporting a foreign address, the Foreign Entity Indicator in position 29 must contain a "1" (one).

______________________________________________________________________________________________________________
230-269 Company City 40 Required. Enter the city, town, or post office where
correspondence should be sent.

______________________________________________________________________________________________________________
270-271 Company State 2 Required. Enter the valid U.S. Postal Service state
abbreviation. Refer to the chart for valid state codes
in Part A, Sec. 12.

______________________________________________________________________________________________________________
272-280 Company ZIP Code 9 Required. Enter the valid nine-digit ZIP assigned by
the U.S. Postal Service. If only the first five-digits
are known, left-justify information and fill unused
positions with blanks.

______________________________________________________________________________________________________________
281-295 Blank 15 Enter blanks.

______________________________________________________________________________________________________________
296-303 Total Number of 8 Enter the total number of Payee "B" Records reported in
Payees the file. Right-justify information and fill unused
positions with zeros.

______________________________________________________________________________________________________________
304-343 Contact Name 40 Required. Enter the name of the person to be contacted
if IRS/ECC-MTB encounters problems with the file or
transmission.

______________________________________________________________________________________________________________
344-358 Contact Phone Number 15 Required. Enter the telephone number of the person to
& Extension contact regarding electronic files. Omit hyphens. If no
extension is available, left-justify information and
fill unused positions with blanks. For example, the
IRS/ECC-MTB Customer Service Section phone number of
866-455-7438 with an extension of 52345 would be
866455743852345.

______________________________________________________________________________________________________________
359-408 Contact e-mail 50 Required if available. Enter the e-mail address of the
Address person to contact regarding electronic files.
Left-justify information. If no e-mail address is
available, enter blanks.

______________________________________________________________________________________________________________
409-499 Blank 91 Enter blanks.

______________________________________________________________________________________________________________
500-507 Record Sequence 8 Required. Enter the number of the record as it appears
Number within your file. The record sequence number for the
"T" record will always be "1" (one), since it is the
first record on your file and you can have only one "T"
record in a file. Each record, thereafter, must be
incremented by one in ascending numerical sequence,
i.e., 2, 3, 4, etc. Right-justify numbers with leading
zeros in the field. For example, the "T" record
sequence number would appear as "00000001" in the
field, the first "A" record would be "00000002", the
first "B" record, "00000003", the second "B" record,
"00000004" and so on until you reach the final record
of the file, the "F" record.

______________________________________________________________________________________________________________
508-517 Blank 10 Enter blanks.

______________________________________________________________________________________________________________
518 Vendor Indicator 1 Required. Enter the appropriate code from the table
below to indicate if your software was provided by a
vendor or produced in-house.

Indicator Usage

V Your software was purchased
from a vendor or other
source.




I Your software was produced
by in-house programmers.




Note: In-house programmer is defined as an employee or a hired contract programmer. If your software is
produced in-house, the following Vendor information fields are not required.

______________________________________________________________________________________________________________
519-558 Vendor Name 40 Required. Enter the name of the company from whom you
purchased your software.

______________________________________________________________________________________________________________
559-598 Vendor Mailing 40 Required. Enter the mailing address.
Address




For U.S. addresses, the vendor city, state, and ZIP Code must be reported as a 40, 2, and 9-position field,
respectively. Filers must adhere to the correct format for the payer city, state, and ZIP Code.




For foreign addresses, filers may use the payer city, state, and ZIP Code as a continuous 51-position field.
Enter information in the following order: city, province or state, postal code, and the name of the country.

______________________________________________________________________________________________________________
599-638 Vendor City 40 Required. Enter the city, town, or post office.

______________________________________________________________________________________________________________
639-640 Vendor State 2 Required. Enter the valid U.S. Postal Service state
abbreviation. Refer to the chart of valid state codes
in Part A, Sec. 12.

______________________________________________________________________________________________________________
641-649 Vendor ZIP Code 9 Required. Enter the valid nine-digit ZIP Code assigned
by the U.S. Postal Service. If only the first
five-digits are known, left-justify information and
fill unused positions with blanks.

______________________________________________________________________________________________________________
650-689 Vendor Contact Name 40 Required. Enter the name of the person who can be
contacted concerning any software questions.

______________________________________________________________________________________________________________
690-704 Vendor Contact Phone 15 Required. Enter the telephone number of the person to
Number & Extension contact concerning software questions. Omit hyphens. If
no extension is available, left-justify information and
fill unused positions with blanks.

______________________________________________________________________________________________________________
705-739 Blank 35 Enter Blanks.

______________________________________________________________________________________________________________
740 Vendor Foreign Entity 1 Enter a "1" (one) if the vendor is a foreign entity.
Indicator Otherwise, enter a blank.

______________________________________________________________________________________________________________
741-748 Blank 8 Enter blanks.

______________________________________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed characters
(CR/LF).

______________________________________________________________________________________________________________




Sec. 3. Transmitter "T" Record --Record Layout


__________________________________________________________________________________
Record Type Payment Year Prior Year Transmitter's Transmitter Blank
Data TIN Control Code
Indicator

__________________________________________________________________________________
1 2-5 6 7-15 16-20 21-27

__________________________________________________________________________________



__________________________________________________________________________________
Test File Foreign Transmitter Transmitter Company Name Company Name
Indicator Entity Name Name (Continuation)
Indicator (Continuation)

__________________________________________________________________________________
28 29 30-69 70-109 110-149 150-189

__________________________________________________________________________________



_______________________________________________________________________________
Company Company Company Company Blank Total Contact
Mailing City State ZIP Code Number of Name
Address Payees

_______________________________________________________________________________
190-229 230-269 270-271 272-280 281-295 296-303 304-343

_______________________________________________________________________________



__________________________________________________________________________________
Contact Contact Blank Record Blank Vendor
Phone Number e-mail Sequence Indicator
& Extension Address Number

__________________________________________________________________________________
344-358 359-408 409-499 500-507 508-517 518

__________________________________________________________________________________



__________________________________________________________________________________
Vendor Name Vendor Vendor City Vendor State Vendor ZIP Vendor
Mailing Code Contact Name
Address

__________________________________________________________________________________
519-558 559-598 599-638 639-640 641-649 650-689

__________________________________________________________________________________



_____________________________________________________________________________________
Vendor Contact Blank Vendor Foreign Blank Blank or CR/LF
Phone Number & Entity Indicator
Extension

_____________________________________________________________________________________
690-704 705-739 740 741-748 749-750

_____________________________________________________________________________________




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 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 field position(s) and for the indicated length.


___________________________________________________________________________________
Record Name: Payer "A" Record

___________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

___________________________________________________________________________________
1 Record Type 1 Required. Enter an "A".

___________________________________________________________________________________
2-5 Payment Year 4 Required. Enter "2008". If reporting
prior year data, report the year which
applies (2006, 2007, etc.).

___________________________________________________________________________________
6-11 Blank 6 Enter blanks.

___________________________________________________________________________________
12-20 Payer's Taxpayer 9 Required. Must be the valid nine-digit
Identification Taxpayer Identification Number assigned
Number (TIN) to the payer. Do not enter blanks,
hyphens, or alpha characters. All zeros,
ones, twos, etc., will have the effect of
an incorrect TIN.




Note: For foreign entities that are not required to have a TIN, this field must be
blank. However, the Foreign Entity Indicator, position 52 of the "A" Record, must
be set to "1" (one).

___________________________________________________________________________________
21-24 Payer Name Control 4 The Payer Name Control can be obtained
only from the mail label on the Package
1096 that is mailed to most payers each
December. If a Package 1096 has not been
received, you can determine your name
control using the following simple rules
or you can leave the field blank. For a
business, use the first four significant
characters of the business name.
Disregard the word "the" when it is the
first word of the name, unless there are
only two words in the name. A dash (-)
and an ampersand (&) are the only
acceptable special characters. Names of
less than four (4) characters should be
left-justified, filling the unused
positions with blanks.

___________________________________________________________________________________
25 Last Filing 1 Enter a "1" (one) if this is the last
Indicator year this payer name and TIN will file
information returns electronically or on
paper; otherwise, enter blank.

___________________________________________________________________________________
26 Combined 1 Required for the Combined Federal/State
Federal/State Filer Filing Program. Enter "1" (one) if
approved or submitting a test to
participate in the Combined Federal/State
Filing Program; otherwise, enter a blank.




Note 1: If the Payer "A" Record is coded for Combined Federal/State Filing Program
there must be coding in the Payee "B" Records and the State Totals "K" Records.




Note 2: If you entered "1" (one) in this field position, be sure to code the Payee
"B" Records with the appropriate state code. Refer to Part A, Sec. 10, for further
information.

___________________________________________________________________________________
27 Type of Return 1 Required. Enter the appropriate code from
the table below:




Type of Return Code




1098 3

1098-C X

1098-E 2

1098-T 8

1099-A 4

1099-B B

1099-C 5

1099-CAP P

1099-DIV 1

1099-G F

1099-H J

1099-INT 6

1099-LTC T

1099-MISC A

1099-OID D

1099-PATR 7

1099-Q Q

1099-R 9

1099-S S

1099-SA M

5498 L

5498-ESA V

5498-SA K

W-2G W

___________________________________________________________________________________
28-41 Amount Codes (See 14 Required. Enter the appropriate amount
Note.) codes for the type of return being
reported. In most cases, the box numbers
on paper information returns correspond
with the amount codes used to file
electronically. However, if discrepancies
occur, this Revenue Procedure governs for
filing electronically. Enter the amount
codes in ascending sequence; numeric
characters followed by alphas.
Left-justify, and fill unused positions
with blanks.




Note: A type of return and an amount code must be present in every Payer "A"
Record even if no money amounts are being reported. For a detailed explanation of
the information to be reported in each amount code, refer to the appropriate paper
instructions for each form.

___________________________________________________________________________________
Amount Codes Form 1098 --Mortgage For Reporting Mortgage Interest Received
Interest Statement From Payers/Borrowers (Payer of Record)
on Form 1098:

Amount Code Amount Type




1 Mortgage interest
received from
payer(s)/borrower(s)

2 Points paid on
purchase of
principal residence

3 Refund (or credit)
of overpaid interest

4 Mortgage Insurance
Premiums

5 Blank (Filer's use)




Amount Codes Form 1098-C --Contributions For Reporting Gross Proceeds From Sales
of Motor Vehicles, Boats, and Airplanes on Form 1098-C:




Amount Code Amount Type




4 Gross proceeds from
sales

Value of goods or
services in exchange
6 for vehicle




Amount Code Form 1098-E --Student Loan For Reporting Interest on Student Loans
Interest Statement on Form 1098-E:




Amount Code Amount Type




1 Student loan
interest received by
lender




Amount Codes Form 1098-T --Tuition For Reporting Tuition Payments on Form
Statement 1098-T:




Amount Code Amount Type




1 Payments received
for qualified
tuition and related
expenses

2 Amounts billed for
qualified tuition
and related expenses

3 Adjustments made for
prior year

4 Scholarships or
grants

5 Adjustments to
scholarships or
grants for a prior
year

7 Reimbursements or
refunds of qualified
tuition and related
expenses from an
insurance contract




Note 1: For Amount Codes 1 and 2 enter either payments received OR amounts billed.
DO NOT report both.




Note 2: Amount Codes 3 and 5 are assumed to be negative. It is not necessary to
code with an over punch or dash to indicate a negative reporting.




Amount Codes Form 1099-A --Acquisition For Reporting the Acquisition or
or Abandonment of Secured Property Abandonment of Secured Property on Form
1099-A:




Amount Code Amount Type




2 Balance of principal
outstanding

4 Fair market value of
property

Amount Codes Form 1099-B --Proceeds For Reporting Payments on Form 1099-B:

From Broker and Barter Exchange Amount Code Amount Type
Transactions




2 Stocks, bonds, etc.
(For forward
contracts, See Note
1.)

3 Bartering (Do not
report negative
amounts.)

4 Federal income tax
withheld (backup
withholding) (Do not
report negative
amounts.)

6 Profit (or loss)
realized in 2008
(See Note 2.)

7 Unrealized profit
(or loss) on open
contracts
--12/31/2007 (See
Note 2.)

8 Unrealized profit
(or loss) on open
contracts
--12/31/2008 (See
Note 2.)

9 Aggregate profit (or
loss) (See Note 2.)




Note 1: The payment amount field associated with Amount Code 2 may be used to
report a loss from a closing transaction on a forward contract. Refer to the "B"
Record - General Field Descriptions and Record Layouts, Payment Amount Fields, for
instructions on reporting negative amounts.




Note 2: Payment Amount Fields 6, 7, 8, and 9 are to be used for the reporting of
regulated futures or foreign currency contracts.




Amount Codes Form 1099-C --Cancellation For Reporting Payments on Form 1099-C:
of Debt

Amount Code Amount Type




2 Amount of debt
canceled

3 Interest, if
included in Amount
Code 2

7 Fair market value of
property (See Note.)




Note: Use Amount Code 7 only if a combined Form 1099-A and 1099-C is being filed.




Amount Code Form 1099-CAP -- For Reporting Payments on Form 1099-CAP:

Changes in Corporate Control and Capital Amount Code Amount Type
Structure




2 Aggregate amount
received




Amount Codes Form 1099-DIV --Dividends For Reporting Payments on Form 1099-DIV:
and Distributions

Amount Code Amount Type




1 Total ordinary
dividends

2 Qualified dividends

3 Total capital gain
distribution

6 Unrecaptured Section
1250 gain

7 Section 1202 gain

8 Collectibles (28%)
rate gain

9 Nondividend
distributions

A Federal income tax
withheld

B Investment expenses

C Foreign tax paid

D Cash liquidation
distributions

E Non-cash liquidation
distributions




Amount Codes Form 1099-G --Certain For Reporting Payments on Form 1099-G:
Government Payments

Amount Code Amount Type




1 Unemployment
compensation

2 State or local
income tax refunds,
credits, or offsets

4 Federal income tax
withheld (backup
withholding or
voluntary
withholding on
unemployment
compensation or
Commodity Credit
Corporation Loans,
or certain crop
disaster payments)

5 Alternative Trade
Adjustment
Assistance (ATAA)
Payments

6 Taxable grants

7 Agriculture payments




Amount Codes Form 1099-H --Health For Reporting Payments on Form 1099-H:

Coverage Tax Credit (HCTC) Advance Amount Code Amount Type
Payments




1 Gross amount of
health insurance
advance payments

2 Amount of advance
payment for January

3 Amount of advance
payment for February

4 Amount of advance
payment for March

5 Amount of advance
payment for April

6 Amount of advance
payment for May

7 Amount of advance
payment for June

8 Amount of advance
payment for July

9 Amount of advance
payment for August

A Amount of advance
payment for
September

B Amount of advance
payment for October

C Amount of advance
payment for November

D Amount of advance
payment for December




Amount Codes Form 1099-INT --Interest For Reporting Payments on Form 1099-INT:
Income

Amount Code Amount Type




1 Interest income not
included in Amount
Code 3

2 Early withdrawal
penalty

3 Interest on U.S.
Savings Bonds and
Treasury obligations

4 Federal income tax
withheld (backup
withholding)

5 Investment expenses

6 Foreign tax paid

8 Tax-exempt interest

9 Specified Private
Activity Bond
Interest




Amount Codes Form 1099-LTC -- For Reporting Payments on Form 1099-LTC:

Long-Term Care and Accelerated Death Amount Code Amount Type
Benefits




1 Gross long-term care
benefits paid

2 Accelerated death
benefits paid

Amount Codes Form 1099-MISC For Reporting Payments on Form 1099-MISC:
--Miscellaneous Income (See Note 1.)

Amount Code Amount Type




1 Rents

2 Royalties (See Note
2.)

3 Other income

4 Federal income tax
withheld (backup
withholding or
withholding on
Indian gaming
profits)

5 Fishing boat
proceeds

6 Medical and health
care payments

7 Nonemployee
compensation

8 Substitute payments
in lieu of dividends
or interest

A Crop insurance
proceeds

B Excess golden
parachute payments

C Gross proceeds paid
to an attorney in
connection with
legal services

D Section 409A
Deferrals

E Section 409A Income




Note 1: If reporting a direct sales indicator only, use Type of Return "A" in
Field Position 27, and Amount Code 1 in Field Position 28 of the Payer "A" Record.
All payment amount fields in the Payee "B" Record will contain zeros.




Note 2: Do not report timber royalties under a "pay-as-cut" contract; these must
be reported on Form 1099-S.




Amount Codes Form 1099-OID --Original For Reporting Payments on Form 1099-OID:
Issue Discount




Amount Code Amount Type




1 Original issue
discount for 2008

2 Other periodic
interest

3 Early withdrawal
penalty

4 Federal income tax
withheld (backup
withholding)

6 Original issue
discount on U.S.
Treasury Obligations

7 Investment expenses




Amount Codes Form 1099-PATR --Taxable For Reporting Payments on Form 1099-PATR:
Distributions Received From Cooperatives

Amount Code Amount Type




1 Patronage dividends

2 Nonpatronage
distributions

3 Per-unit retain
allocations

4 Federal income tax
withheld (backup
withholding)

5 Redemption of
nonqualified notices
and retain
allocations

6 Deduction for
qualified production
activities income

Pass-Through Credits




7 Investment credit

8 Work opportunity
credit

9 Patron's alternative
minimum tax (AMT)
adjustment

A For filer's use for
pass-through credits
and deductions




Amount Codes Form 1099-Q --Payments From For Reporting Payments on a Form 1099-Q:
Qualified Education Programs (Under
Sections 529 and 530)

Amount Code Amount Type




1 Gross distribution

2 Earnings

3 Basis




Amount Codes Form 1099-R --Distributions For Reporting Payments on Form 1099-R:
From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance
Contracts, etc.

Amount Code Amount Type

1 Gross distribution

2 Taxable amount (See
Note 1.)

3 Capital gain
(included in Amount
Code 2)

4 Federal income tax
withheld

5 Employee
contributions or
insurance premiums

6 Net unrealized
appreciation in
employer's
securities

8 Other

9 Total employee
contributions

A Traditional
IRA/SEP/SIMPLE
distribution or Roth
conversion (See Note
2.)




Note 1: If the taxable amount cannot be determined, enter a "1" (one) in position
547 of the "B" Record. Payment Amount 2 must contain zeros.




Note 2: For Form 1099-R, report the Roth conversion or total amount distributed
from an IRA, SEP, or SIMPLE in Payment Amount Field A (IRA/SEP/SIMPLE distribution
or Roth conversion) of the Payee "B" Record, and generally, the same amount in
Payment Amount Field 1 (Gross Distribution). The IRA/SEP/SIMPLE indicator should
be set to "1" (one) in Field Position 548 of the Payee "B" Record.




Amount Codes Form 1099-S --Proceeds From For Reporting Payments on Form 1099-S:
Real Estate Transactions

Amount Code Amount Type




Gross proceeds (See
2 Note.)

5 Buyer's part of real
estate tax




Note: Include payments of timber royalties made under a "pay-as-cut" contract,
reportable under IRC section 6050N. If timber royalties are being reported, enter
"TIMBER" in the description field of the "B" Record.




Amount Codes Form 1099-SA For Reporting Distributions on Form
--Distributions From an HSA, Archer MSA, 1099-SA:
or Medicare Advantage MSA

Amount Code Amount Type




1 Gross distribution

2 Earnings on excess
contributions

4 Fair market value of
the account on date
of death

Amount Codes Form 5498 --IRA For Reporting Information on Form 5498:
Contribution Information

Amount Code Amount Type




1 IRA contributions
(other than amounts
in Amount Codes 2,
3, 4, 8, 9, and A)
(See Notes 1 and 2.)

2 Rollover
contributions

3 Roth conversion
amount

4 Recharacterized
contributions

5 Fair market value of
account

6 Life insurance cost
included in Amount
Code 1

8 SEP contributions

9 SIMPLE contributions

A Roth IRA
contributions




Note 1: If reporting IRA contributions for a participant in a military operation,
see 2008 Instructions for Forms 1099-R and 5498.




Note 2: Also include employee contributions to an IRA under a SEP plan but not
salary reduction contributions. DO NOT include EMPLOYER contributions; these are
included in Amount Code 8.




Amount Codes Form 5498-ESA --Coverdell For Reporting Information on Form
ESA Contribution Information 5498-ESA:

Amount Code Amount Type




Coverdell ESA
1 contributions

Rollover
2 contributions




Amount Codes Form 5498-SA --HSA, Archer For Reporting Information on Form
MSA, or Medicare Advantage MSA 5498-SA:
Information

Amount Code Amount Type




1 Employee or
self-employed
person's Archer MSA
contributions made
in 2008 and 2009 for
2008

2 Total contributions
made in 2008 (See
current 2008
Instructions.)

3 Total HSA/MSA
contributions made
in 2009 for 2008

4 Rollover
contributions (See
Note.)




5 Fair market value of
HSA, Archer MSA or
Medicare Advantage
MSA




Note: This is the amount of any rollover made to this MSA in 2008 after a
distribution from another MSA. For detailed information on reporting, see the 2008
Instructions for Forms 1099-SA and 5498-SA.




Amount Codes Form W-2G --Certain For Reporting Payments on Form W-2G:
Gambling Winnings

Amount Code Amount Type




1 Gross winnings

Federal income tax
2 withheld

Winnings from
7 identical wagers




___________________________________________________________________________________
42-51 Blank 10 Enter blanks.

___________________________________________________________________________________
52 Foreign Entity 1 Enter a "1" (one) if the payer is a
Indicator foreign entity and income is paid by the
foreign entity to a U.S. resident.
Otherwise, enter a blank.

___________________________________________________________________________________
53-92 First Payer Name 40 Required. Enter the name of the payer
Line whose TIN appears in positions 12-20 of
the "A" Record. Any extraneous
information must be deleted. Left-justify
information, and fill unused positions
with blanks. (Filers should not enter a
transfer agent's name in this field. Any
transfer agent's name should appear in
the Second Payer Name Line Field.)

___________________________________________________________________________________
93-132 Second Payer Name 40 If the Transfer (or Paying) Agent
Line Indicator (position 133) contains a "1"
(one), this field must contain the name
of the transfer (or paying) agent. If the
indicator contains a "0" (zero), this
field may contain either a continuation
of the First Payer Name Line or blanks.
Left-justify information and fill unused
positions with blanks.

___________________________________________________________________________________
133 Transfer Agent 1 Required. Identifies the entity in the
Indicator Second Payer Name Line Field.




Code Meaning


__________________________________________



1 The entity in the
Second Payer Name
Line Field is the
transfer (or paying)
agent.




0 (zero) The entity shown is
not the transfer (or
paying) agent (i.e.,
the Second Payer
Name Line Field
contains either a
continuation of the
First Payer Name
Line Field or
blanks).

___________________________________________________________________________________
134-173 Payer Shipping 40 Required. If the Transfer Agent Indicator
Address in position 133 is a "1" (one), enter the
shipping address of the transfer (or
paying) agent. Otherwise, enter the
actual shipping address of the payer. The
street address should include number,
street, apartment or suite number, or PO
Box if mail is not delivered to a street
address. Left-justify information, and
fill unused positions with blanks.




For U.S. addresses, the payer city, state, and ZIP Code must be reported as a 40,
2, and 9-position field, respectively. Filers must adhere to the correct format
for the payer city, state, and ZIP Code.




For foreign addresses, filers may use the payer city, state, and ZIP Code as a
continuous 51-position field. Enter information in the following order: city,
province or state, postal code, and the name of the country. When reporting a
foreign address, the Foreign Entity Indicator in position 52 must contain a "1"
(one).

___________________________________________________________________________________
174-213 Payer City 40 Required. If the Transfer Agent Indicator
in position 133 is a "1" (one), enter the
city, town, or post office of the
transfer agent. Otherwise, enter the
city, town, or post office of the payer.
Left-justify information, and fill unused
positions with blanks. Do not enter state
and ZIP Code information in this field.

___________________________________________________________________________________
214-215 Payer State 2 Required. Enter the valid U.S. Postal
Service state abbreviations. Refer to the
chart of valid state abbreviations in
Part A, Sec. 12.

___________________________________________________________________________________
216-224 Payer ZIP Code 9 Required. Enter the valid nine-digit ZIP
Code assigned by the U.S. Postal Service.
If only the first five-digits are known,
left-justify information and fill the
unused positions with blanks. For foreign
countries, alpha characters are
acceptable as long as the filer has
entered a "1" (one) in the Foreign Entity
Indicator, located in Field Position 52
of the "A" Record.

___________________________________________________________________________________
225-239 Payer's Phone Number 15 Enter the payer's phone number and
& Extension extension. Omit hyphens. Left-justify
information and fill unused positions
with blanks.

___________________________________________________________________________________
240-499 Blank 260 Enter blanks.

___________________________________________________________________________________
500-507 Record Sequence 8 Required. Enter the number of the record
Number as it appears within your file. The
record sequence number for the "T" record
will always be "1" (one), since it is the
first record on your file and you can
have only one "T" record in a file. Each
record, thereafter, must be incremented
by one in ascending numerical sequence,
i.e., 2, 3, 4, etc. Right-justify numbers
with leading zeros in the field. For
example, the "T" record sequence number
would appear as "00000001" in the field,
the first "A" record would be "00000002",
the first "B" record, "00000003", the
second "B" record, "00000004" and so on
until you reach the final record of the
file, the "F" record.

___________________________________________________________________________________
508-748 Blank 241 Enter blanks.

___________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed
(CR/LF) characters.

___________________________________________________________________________________




Sec. 5. Payer "A" Record --Record Layout


__________________________________________________________________________________
Record Type Payment Year Blank Payer TIN Payer Name Last Filing
Control Indicator

__________________________________________________________________________________
1 2-5 6-11 12-20 21-24 25

__________________________________________________________________________________



__________________________________________________________________________________
Combined Type of Amount Codes Blank Foreign First Payer
Federal/State Return Entity Name Line
Filer Indicator

__________________________________________________________________________________
26 27 28-41 42-51 52 53-92

__________________________________________________________________________________



__________________________________________________________________________________
Second Payer Transfer Payer Payer City Payer State Payer ZIP
Name Line Agent Shipping Code
Indicator Address

__________________________________________________________________________________
93-132 133 134-173 174-213 214-215 216-224

__________________________________________________________________________________



_____________________________________________________________________________________
Payer's Phone Blank Record Sequence Blank Blank or CR/LF
Number and Number
Extension

_____________________________________________________________________________________
225-239 240-499 500-507 508-748 749-750

_____________________________________________________________________________________




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 fourteen 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, 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/ECCMTB.

.07 Those payers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A, Sec. 10, 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 numeric characters.


______________________________________________________________________________________________________________
Record Name: Payee "B" Record

______________________________________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

______________________________________________________________________________________________________________
1 Record Type 1 Required. Enter "B".

______________________________________________________________________________________________________________
2-5 Payment Year 4 Required. Enter "2008". If reporting prior year data,
report the year which applies (2006, 2007, etc.).

______________________________________________________________________________________________________________
6 Corrected Return 1 Required for corrections only. Indicates a corrected
Indicator (See Note.) return.

Code Definition


________________________________________________________



G If this is a
one-transaction correction
or the first of a
two-transaction correction




C If this is the second
transaction of a
two-transaction correction




Blank If this is not a return
being submitted to correct
information already
processed by IRS




Note: C, G, and non-coded records must be reported using separate Payer "A" Records. Refer to Part A, Sec. 8,
for specific instructions on how to file corrected returns.

______________________________________________________________________________________________________________
7-10 Name Control 4 If determinable, enter the first four characters of the
surname of the person whose TIN is being reported in
positions 12-20 of the "B" Record; otherwise, enter
blanks. This usually is the payee. If the name that
corresponds to the TIN is not included in the first or
second payee name line and the correct name control is
not provided, a backup withholding notice may be
generated for the record. Surnames of less than four
characters should be left-justified, filling the unused
positions with blanks. Special characters and imbedded
blanks should be removed. In the case of a business,
other than a sole proprietorship, use the first four
significant characters of the business name. Disregard
the word "the" when it is the first word of the name,
unless there are only two words in the name. A dash (-)
and an ampersand (&) are the only acceptable special
characters. Surname prefixes are considered, e.g., for
Van Elm, the name control would be VANE. For a sole
proprietorship, use the name of the owner to create the
name control and report the owner's name in positions
248-287, First Payee Name Line.

______________________________________________________________________________________________________________
Note: Imbedded blanks, extraneous words, titles, and special characters (i.e., Mr., Mrs., Dr., period [.],
apostrophe [']) should be removed from the Payee Name Lines. A dash (-) and an ampersand (&) are the only
acceptable special characters.

______________________________________________________________________________________________________________


The following examples may be helpful to filers in developing the Name Control:


_____________________________________________________________________________________________________________
Record Name: Payee "B" Record (Continued)

_____________________________________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

_____________________________________________________________________________________________________________
Name Name Control




Individuals:




Jane Brown BROW

John A. Lee LEE*

James P. En, Sr. EN*

John O'Neil ONEI

Mary Van Buren VANB

Juan De Jesus DEJE

Gloria A. El-Roy EL-R

Mr. John Smith SMIT

Joe McCarthy MCCA

Pedro Torres-Lopes** TORR

Maria Lopez Moreno** LOPE

Binh To La LA*

Nhat Thi Pham PHAM




Corporations:




The First National Bank FIRS

The Hideaway THEH

A&B Cafe A&BC

11TH Street Inc. 11TH




Sole Proprietor:




Mark Hemlock HEML

DBA The Sunshine Club

Mark D'Allesandro DALL




Partnership:

Robert Aspen and Bess Willow ASPE

Harold Fir, Bruce Elm, and Joyce Spruce et FIR*
al Ptr




Estate:

Frank White Estate WHIT

Estate of Sheila Blue BLUE




Trusts and Fiduciaries:

Daisy Corporation Employee Benefit Trust DAIS

Trust FBO The Cherryblossom Society CHER




Exempt Organizations:

Laborer's Union, AFL-CIO LABO

St. Bernard's Methodist Church Bldg. Fund STBE




*Name Controls of less than four significant characters must be left-justified and blank-filled.

**For Hispanic names, when two last names are shown for an individual, derive the name control from the
first last name.




______________________________________________________________________________________________________________
Record Name: Payee "B" Record (Continued)

______________________________________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

______________________________________________________________________________________________________________
11 Type of TIN 1 This field is used to identify the Taxpayer Identification Number
(TIN) in positions 12-20 as either an Employer Identification
Number (EIN), a Social Security Number (SSN), an Individual
Taxpayer Identification Number (ITIN) or an Adoption Taxpayer
Identification Number (ATIN). Enter the appropriate code from the
following table:




Code Type of TIN Type of Account

1 EIN A business, organization, some sole
proprietors, or other entity

2 SSN An individual, including some sole
proprietors




2 ITIN An individual required to have a
taxpayer identification number, but
who is not eligible to obtain an SSN




2 ATIN An adopted individual prior to the
assignment of a social security number




Blank N/A If the type of TIN is not
determinable, enter a blank

______________________________________________________________________________________________________________
12-20 Payee's Taxpayer 9 Required. Enter the nine-digit Taxpayer Identification Number of
Identification Number the payee (SSN, ITIN, ATIN, or EIN). If an identification number
(TIN) has been applied for but not received, enter blanks. Do not enter
hyphens or alpha characters. All zeros, ones, twos, etc., will
have the effect of an incorrect TIN. If the TIN is not available,
enter blanks.




Note: If you are required to report payments made through Foreign Intermediaries and Foreign Flow-Through
Entities on Form 1099, see the 2008 General Instructions for Forms 1099, 1098, 5498 and W-2G for reporting
requirements.

______________________________________________________________________________________________________________
21-40 Payer's Account 20 Required if submitting more than one information return of the
Number For Payee same type for the same payee. Enter any number assigned by the
payer to the payee that can be used by the IRS to distinguish
between information returns. This number must be unique for each
information return of the same type for the same payee. If a
payee has more than one reporting of the same document type, it
is vital that each reporting have a unique account number. For
example, if a payer has 3 separate pension distributions for the
same payee and 3 separate Forms 1099-R are filed, 3 separate
unique account numbers are required. A payee's account number may
be given a unique sequencing number, such as 01, 02 or A, B,
etc., to differentiate each reported information return. Do not
use the payee's TIN since this will not make each record unique.
This information is critical when corrections are filed. This
number will be provided with the backup withholding notification
and may be helpful in identifying the branch or subsidiary
reporting the transaction. The account number can be any
combination of alpha, numeric or special characters. If fewer
than twenty characters are used, filers may either left or
right-justify, filling the remaining positions with blanks.

______________________________________________________________________________________________________________
41-44 Payer's Office Code 4 Enter office code of payer; otherwise, enter blanks. For payers
with multiple locations, this field may be used to identify the
location of the office submitting the information return. This
code will also appear on backup withholding notices.

______________________________________________________________________________________________________________
45-54 Blank 10 Enter blanks.

______________________________________________________________________________________________________________
Payment Amount Fields Required. Filers should allow for all payment amounts. For those
(Must be numeric) not used, enter zeros. Each payment field must contain 12 numeric
characters. Each payment amount must contain U.S. dollars and
cents. The right-most two positions represent cents in the
payment amount fields. Do not enter dollar signs, commas, decimal
points, or negative payments, except those items that reflect a
loss on Form 1099-B or 1099-Q. Positive and negative amounts are
indicated by placing a "+" (plus) or "-" (minus) sign in the
left-most position of the payment amount field. A negative over
punch in the unit's position may be used, instead of a minus
sign, to indicate a negative amount. If a plus sign, minus sign,
or negative over punch is not used, the number is assumed to be
positive. Negative over punch cannot be used in PC created files.
Payment amounts must be right-justified and unused positions must
be zero filled.

______________________________________________________________________________________________________________
55-66 Payment Amount 1* 12 The amount reported in this field represents payments for Amount
Code 1 in the "A" Record.

______________________________________________________________________________________________________________
67-78 Payment Amount 2* 12 The amount reported in this field represents payments for Amount
Code 2 in the "A" Record.

______________________________________________________________________________________________________________
79-90 Payment Amount 3* 12 The amount reported in this field represents payments for Amount
Code 3 in the "A" Record.

______________________________________________________________________________________________________________
91-102 Payment Amount 4* 12 The amount reported in this field represents payments for Amount
Code 4 in the "A" Record.

______________________________________________________________________________________________________________
103-114 Payment Amount 5* 12 The amount reported in this field represents payments for Amount
Code 5 in the "A" Record.

______________________________________________________________________________________________________________
115-126 Payment Amount 6* 12 The amount reported in this field represents payments for Amount
Code 6 in the "A" Record.

______________________________________________________________________________________________________________
127-138 Payment Amount 7* 12 The amount reported in this field represents payments for Amount
Code 7 in the "A" Record.

______________________________________________________________________________________________________________
139-150 Payment Amount 8* 12 The amount reported in this field represents payments for Amount
Code 8 in the "A" Record.

______________________________________________________________________________________________________________
151-162 Payment Amount 9* 12 The amount reported in this field represents payments for Amount
Code 9 in the "A" Record.

______________________________________________________________________________________________________________
163-174 Payment Amount A* 12 The amount reported in this field represents payments for Amount
Code A in the "A" Record.

______________________________________________________________________________________________________________
175-186 Payment Amount B* 12 The amount reported in this field represents payments for Amount
Code B in the "A" Record.

______________________________________________________________________________________________________________
187-198 Payment Amount C* 12 The amount reported in this field represents payments for Amount
Code C in the "A" Record.

______________________________________________________________________________________________________________
199-210 Payment Amount D* 12 The amount reported in this field represents payments for Amount
Code D in the "A" Record.

______________________________________________________________________________________________________________
211-222 Payment Amount E* 12 The amount reported in this field represents payments for Amount
Code E in the "A" Record.

*If there are discrepancies between the payment amount fields and the boxes on the paper forms, the
instructions in this Revenue Procedure must be followed for electronic filing.

______________________________________________________________________________________________________________
223-246 Reserved 24 Enter blanks.

______________________________________________________________________________________________________________
247 Foreign Country 1 If the address of the payee is in a foreign country, enter a "1"
Indicator (one) in this field; otherwise, enter blank. When filers use this
indicator, they may use a free format for the payee city, state,
and ZIP Code. Enter information in the following order: city,
province or state, postal code, and the name of the country.
Address information must not appear in the First or Second Payee
Name Line.

______________________________________________________________________________________________________________
248-287 First Payee Name Line 40 Required. Enter the name of the payee (preferably surname first)
whose Taxpayer Identification Number (TIN) was provided in
positions 12-20 of the Payee "B" Record. Left-justify and fill
unused positions with blanks. If more space is required for the
name, use the Second Payee Name Line Field. If reporting
information for a sole proprietor, the individual's name must
always be present on the First Payee Name Line. The use of the
business name is optional in the Second Payee Name Line Field.
End the First Payee Name Line with a full word. Use appropriate
spacing. Extraneous words, titles, and special characters (i.e.,
Mr., Mrs., Dr., period, apostrophe) should be removed from the
Payee Name Lines. A dash (-) and an ampersand (&) are the only
acceptable special characters for First and Second Payee Name
Lines.

Note: If you are required to report payments made through Foreign Intermediaries and Foreign Flow-Through
Entities on Form 1099, see the 2008 General Instruction for Forms 1099, 1098, 5498, and W-2G for reporting
requirements.

______________________________________________________________________________________________________________
288-327 Second Payee Name 40 If there are multiple payees (e.g., partners, joint owners, or
Line spouses), use this field for those names not associated with the
TIN provided in positions 12-20 of the "B" Record, or if not
enough space was provided in the First Payee Name Line, continue
the name in this field. Left-justify information and fill unused
positions with blanks. Do not enter address information. It is
important that filers provide as much payee information to
IRS/ECC-MTB as possible to identify the payee associated with the
TIN. Left-justify and fill unused positions with blanks. See Note
above in First Payee Name Line.

______________________________________________________________________________________________________________
328-367 Blank 40 Enter blanks.

______________________________________________________________________________________________________________
368-407 Payee Mailing Address 40 Required. Enter mailing address of payee. Street address should
include number, street, apartment or suite number, or PO Box if
mail is not delivered to street address. This field must not
contain any data other than the payee's mailing address.

______________________________________________________________________________________________________________
408-447 Blank 40 Enter blanks.

______________________________________________________________________________________________________________
448-487 Payee City 40 Required. Enter the city, town or post office. Left-justify
information and fill the unused positions with blanks. Enter APO
or FPO if applicable. Do not enter state and ZIP Code information
in this field.

______________________________________________________________________________________________________________
488-489 Payee State 2 Required. Enter the valid U.S. Postal Service state abbreviations
for states or the appropriate postal identifier (AA, AE, or AP)
described in Part A, Sec. 12.

______________________________________________________________________________________________________________
490-498 Payee ZIP Code 9 Required. Enter the valid ZIP Code (nine or five-digit) assigned
by the U.S. Postal Service. If only the first five-digits are
known, left-justify information and fill the unused positions
with blanks. For foreign countries, alpha characters are
acceptable as long as the filer has entered a "1" (one) in the
Foreign Country Indicator, located in position 247 of the "B"
Record.

______________________________________________________________________________________________________________
499 Blank 1 Enter blank.

______________________________________________________________________________________________________________
500-507 Record Sequence 8 Required. Enter the number of the record as it appears within
Number your file. The record sequence number for the "T" record will
always be "1" (one), since it is the first record on your file
and you can have only one "T" record in a file. Each record,
thereafter, must be incremented by one in ascending numerical
sequence, i.e., 2, 3, 4, etc. Right-justify numbers with leading
zeros in the field. For example, the "T" record sequence number
would appear as "00000001" in the field, the first "A" record
would be "00000002", the first "B" record, "00000003", the second
"B" record, "00000004" and so on until you reach the final record
of the file, the "F" record.

______________________________________________________________________________________________________________
508-543 Blank 36 Enter blanks.

______________________________________________________________________________________________________________

Standard Payee "B" Record Format For All Types of Returns, Positions 1-543



___________________________________________________________________________________________________________
Record Type Payment Year Corrected Name Control Type of TIN Payee's TIN Payer's
Return Account Number
Indicator For Payee

___________________________________________________________________________________________________________
1 2-5 6 7-10 11 12-20 21-40

___________________________________________________________________________________________________________



___________________________________________________________________________________________________________
Payer's Office Blank Payment Amount Payment Amount Payment Amount Payment Amount Payment Amount
Code 1 2 3 4 5

___________________________________________________________________________________________________________
41-44 45-54 55-66 67-78 79-90 91-102 103-114

___________________________________________________________________________________________________________



______________________________________________________________________________________________________________
Payment Amount 6 Payment Amount 7 Payment Amount 8 Payment Amount 9 Payment Amount A Payment Amount B

______________________________________________________________________________________________________________
115-126 127-138 139-150 151-162 163-174 175-186

______________________________________________________________________________________________________________



____________________________________________________________________________________________________________
Payment Payment Payment Reserved Foreign First Payee Second Payee Blank
Amount C Amount D Amount E Country Name Line Name Line
Indicator

____________________________________________________________________________________________________________
187-198 199-210 211-222 223-246 247 248-287 288-327 328-367

____________________________________________________________________________________________________________



____________________________________________________________________________________________________________
Payee Mailing Blank Payee City Payee State Payee ZIP Blank Record Blank
Address Code Sequence
Number

____________________________________________________________________________________________________________
368-407 408-447 448-487 488-489 490-498 499 500-507 508-543

____________________________________________________________________________________________________________


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-C

(3) Form 1098-E

(4) Form 1098-T

(5) Form 1099-A

(6) Form 1099-B

(7) Form 1099-C

(8) Form 1099-CAP

(9) Form 1099-DIV*

(10) Form 1099-G*

(11) Form 1099-H

(12) Form 1099-INT*

(13) Form 1099-LTC

(14) Form 1099-MISC*

(15) Form 1099-OID*

(16) Form 1099-PATR*

(17) Form 1099-Q

(18) Form 1099-R*

(19) Form 1099-S

(20) Form 1099-SA

(21) Form 5498*

(22) Form 5498-ESA

(23) Form 5498-SA

(24) Form W-2G

*These forms may be filed through the Combined Federal/State Filing Program. IRS/ECC-MTB will forward these records to participating states for filers who have been approved for the program. See Part A, Sec. 10, for information about the program, including specific codes for the record layouts.


_______________________________________________________________________________________________________________
(1) Payee "B" Record --Record Layout Positions 544 --750 for Form 1098

_______________________________________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

_______________________________________________________________________________________________________________
544 --662 Blank 119 Enter blanks.

_______________________________________________________________________________________________________________
663 --722 Special Data Entries 60 This portion of the "B" Record may be used to record information
for state or local government reporting or for the filer's own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not
utilized, enter blanks.

_______________________________________________________________________________________________________________
723 --748 Blank 26 Enter blanks.

_______________________________________________________________________________________________________________
749 --750 Blank 2 Enter blanks or carriage return/line feed (CR/LF) characters.

_______________________________________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544 --750 for Form 1098



________________________________________________________________________________________________________________
Blank Special Data Entries Blank Blank or CR/LF

________________________________________________________________________________________________________________
544 --662 663 --722 723 --748 749 --750

________________________________________________________________________________________________________________



___________________________________________________________________________________
(2) Payee "B" Record --Record Layout Positions 544 --750 for Form 1098-C

___________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

___________________________________________________________________________________
544 Blank 2 Enter blanks.
--545

___________________________________________________________________________________
546 Transaction 1 Enter "1" (one) if the amount reported in Payment
Indicator Amount Field 4. is an arm's length transaction to
an unrelated party. Otherwise, enter a blank.

___________________________________________________________________________________
547 Transfer After 1 Enter "1" (one) if the vehicle will not be
Improvements transferred for money, other property, or
Indicator services before completion of material
improvements or significant intervening use.
Otherwise, enter a blank.

___________________________________________________________________________________
548 Transfer Below 1 Enter "1" (one) if the vehicle is transferred to
Fair Market a needy individual for significantly below fair
Value Indicator market value. Otherwise, enter a blank.

___________________________________________________________________________________
549 Make, Model, 39 Enter the make, model and year of vehicle.
--587 Year Left-justify and fill un-used positions with
blanks.

___________________________________________________________________________________
588-612 Vehicle or Other 25 Enter the vehicle or other identification number
Identification of the donated vehicle. Left-justify and fill
Number unused positions with blanks.

___________________________________________________________________________________
613 Vehicle 39 Enter a description of material improvements or
--651 Description significant intervening use and duration of use.
Left-justify and fill unused positions with
blanks.

___________________________________________________________________________________
652 Date of 8 Enter the date the contribution was made to an
--659 Contribution organization, in the format YYYYMMDD (e.g.,
January 5, 2008, would be 20080105). Do not enter
hyphens or slashes.

___________________________________________________________________________________
660 Donee Indicator 1 Enter the appropriate indicator from the
following table to report if the donee of the
vehicle provides goods or services in exchange
for the vehicle.




Indicator Usage




1 Donee provided goods or
services




2 Donee did not provide
goods or services

___________________________________________________________________________________
661 Intangible 1 Enter a "1" (one) if only intangible religious
Religious benefits were provided in exchange for the
Benefits vehicle; otherwise, leave blank.
Indicator

___________________________________________________________________________________
662 Deduction $500 1 Enter a "1" (one) if
or Less under law donor cannot
Indicator claim a deduction of
more than $500 for the
vehicle; otherwise,
leave blank.

___________________________________________________________________________________
663 Special Data 60 This portion of the "B" Record may be used to
--722 Entries record information for state or local government
reporting or for the filer's own purposes. Payers
should contact the state or local revenue
departments for the filing requirements. If this
field is not utilized, enter blanks.

___________________________________________________________________________________
723 Date of Sale 8 Enter the date of sale, in the format YYYYMMDD
--730 (e.g., January 5, 2008, would be 20080105). Do
not enter hyphens or slashes.

___________________________________________________________________________________
731 Goods and 18 Enter a description of any goods and services
--748 Services received for the vehicle; otherwise, leave blank.
Left-justify and fill unused positions with
blanks.

___________________________________________________________________________________
749 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
--750 characters.

___________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544 --750 for Form 1098-C



_____________________________________________________________________________________________________________
Blank Transaction Transfer After Transfer Make, Vehicle or Other Vehicle Description
Indicator Improvements Below Fair Model, Identification Number
Indicator Market Year
Value
Indicator

_____________________________________________________________________________________________________________
544 --545 546 547 548 549 --587 588 --612 613 --651

_____________________________________________________________________________________________________________



____________________________________________________________________________________________________________________________
Intangible
Religious Deduction $500
Date of Donee Benefits or Less Special Data Goods and
Contribution Indicator Indicator Indicator Entries Date of Sale Services Blank or CR/LF

____________________________________________________________________________________________________________________________
652 --659 660 661 662 663 --722 723 --730 731 --748 749 --750

____________________________________________________________________________________________________________________________



____________________________________________________________________________________
(3) Payee "B" Record --Record Layout Positions 544 --750 for Form 1098-E

____________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

____________________________________________________________________________________
544 Blank 3 Enter blanks.
--546

____________________________________________________________________________________
547 Origination 1 Enter "1" (one) if the amount reported in Payment
Fees/Capitalized Amount Field 1 includes loan origination fees
Interest and/or capitalized interest. Otherwise, enter a
Indicator blank.

____________________________________________________________________________________
548 Blank 115 Enter blanks.
--662

____________________________________________________________________________________
663 Special Data 60 This portion of the "B" Record may be used to
--722 Entries record information for state or local government
reporting or for the filer's own purposes. Payers
should contact the state or local revenue
departments for the filing requirements. If this
field is not utilized, enter blanks.

____________________________________________________________________________________
723 Blank 26 Enter blanks.
--748

____________________________________________________________________________________
749 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
--750 characters.

____________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544 --750 for Form 1098-E



_______________________________________________________________________________________________________________
Blank Origination Blank Special Data Blank Blank or CR/LF
Fees/Capitalized Entries
Interest
Indicator

_______________________________________________________________________________________________________________
544 --546 547 548 --662 663 --722 723 --748 749 --750

_______________________________________________________________________________________________________________



____________________________________________________________________________________
(4) Payee "B" Record --Record Layout Positions 544 --750 for Form 1098-T

____________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

____________________________________________________________________________________
544 Blank 3 Enter blanks.
--546

____________________________________________________________________________________
547 Half-time 1 Enter "1" (one) if the student was at least a
Student half-time student during any academic period that
Indicator began in 2008. Otherwise, enter a blank.

____________________________________________________________________________________
548 Graduate Student 1 Enter "1" (one) if the student is enrolled
Indicator exclusively in a graduate level program.
Otherwise, enter a blank.

____________________________________________________________________________________
549 Academic Period 1 Enter "1" (one) if the amount in Payment Amount
Indicator Field 1 or Payment Amount Field 2 includes amounts
for an academic period beginning January through
March 2009. Otherwise, enter a blank.

____________________________________________________________________________________
550 Method of 1 Required. Enter "1" (one) if the method of
Reporting 2007 reporting has changed from the previous year.
Amounts Otherwise, enter a blank.
Indicator

____________________________________________________________________________________
551 Blank 112 Enter blanks.
--662

____________________________________________________________________________________
663 Special Data 60 This portion of the "B" Record may be used to
--722 Entries record information for state or local government
reporting or for the filer's own purposes. Payers
should contact the state or local revenue
departments for the filing requirements. If this
field is not utilized, enter blanks.

____________________________________________________________________________________
723 Blank 26 Enter blanks.
--748

____________________________________________________________________________________
749 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
--750 characters.

____________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1098-T



_____________________________________________________________________________________
Blank Half-time Graduate Student Academic Period Method of
Student Indicator Indicator Reporting 2007
Indicator Amounts
Indicator

_____________________________________________________________________________________
544-546 547 548 549 550

_____________________________________________________________________________________



____________________________________________________________________________________
Blank Special Data Entries Blank Blank or CR/LF

____________________________________________________________________________________
551-662 663-722 723-748 749-750

____________________________________________________________________________________



_____________________________________________________________________________________________________________
(5) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-A

_____________________________________________________________________________________________________________
Field Position Field Title Length Description and Remarks

_____________________________________________________________________________________________________________
544-546 Blank 3 Enter blanks.

_____________________________________________________________________________________________________________
547 Personal 1 Enter the appropriate indicator from the table below:
Liability
Indicator




Indicator Usage




1 Borrower was personally liable
for repayment of the debt.




Blank Borrower was not personally
liable for repayment of the
debt.

_____________________________________________________________________________________________________________
548-555 Date of 8 Enter the acquisition date of the secured property or the
Lender's date the lender first knew or had reason to know the
Acquisition or property was abandoned, in the format YYYYMMDD (e.g.,
Knowledge of January 5, 2008, would be 20080105). Do not enter hyphens or
Abandonment slashes.

_____________________________________________________________________________________________________________
556-594 Description of 39 Enter a brief description of the property. For real
Property property, enter the address, or, if the address does not
sufficiently identify the property, enter the section, lot
and block. For personal property, enter the type, make and
model (e.g., Car-1999 Buick Regal or Office Equipment).
Enter "CCC" for crops forfeited on Commodity Credit
Corporation loans. If fewer than 39 positions are required,
left-justify information and fill unused positions with
blanks.

_____________________________________________________________________________________________________________
595-662 Blank 68 Enter blanks.

_____________________________________________________________________________________________________________
663-722 Special Data 60 This portion of the "B" Record may be used to record
Entries information for state or local government reporting or for
the filer's own purposes. Payers should contact the state or
local revenue departments for the filing requirements. If
this field is not utilized, enter blanks.

_____________________________________________________________________________________________________________
723-748 Blank 26 Enter blanks.

_____________________________________________________________________________________________________________
749-750 Blank 2 Enter blanks, or carriage return/line feed (CR/LF)
characters.

_____________________________________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-A



______________________________________________________________________________________________________________
Blank Personal Liability Date of Lender's Description of Blank
Indicator Acquisition or Property
Knowledge of
Abandonment

______________________________________________________________________________________________________________
544-546 547 548-555 556-594 595-662

______________________________________________________________________________________________________________



____________________________________________________________________________________
Special Data Entries Blank Blank or CR/LF

____________________________________________________________________________________
663-722 723-748 749-750

____________________________________________________________________________________



_____________________________________________________________________________________________________________
(6) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-B

_____________________________________________________________________________________________________________
Field Position Field Title Length Description and Remarks

_____________________________________________________________________________________________________________
544 Second TIN 1 Enter "2" (two) to indicate notification by IRS twice within
Notice three calendar years that the payee provided an incorrect
(Optional) name and/or TIN combination; otherwise, enter a blank.

_____________________________________________________________________________________________________________
545-546 Blank 2 Enter blanks.

_____________________________________________________________________________________________________________
547 Gross Proceeds 1 Enter the appropriate indicator from the following table, to
Indicator identify the amount reported in Amount Code 2; otherwise,
enter a blank.




Indicator Usage




1 Gross proceeds




2 Gross proceeds less commissions
and options premiums

_____________________________________________________________________________________________________________
548-555 Date of Sale or 8 For broker transactions, enter the trade date of the
Exchange transaction. For barter exchanges, enter the date when cash,
property, a credit, or scrip is actually or constructively
received in the format YYYYMMDD (e.g., January 5, 2008,
would be 20080105). Enter blanks if this is an aggregate
transaction. Do not enter hyphens or slashes.

_____________________________________________________________________________________________________________
556-568 CUSIP Number 13 For broker transactions only, enter the CUSIP (Committee on
Uniform Security Identification Procedures) number of the
item reported for Amount Code 2 (stocks, bonds, etc.). Enter
blanks if this is an aggregate transaction. Enter "0s"
(zeros) if the number is not available. Right-justify
information and fill unused positions with blanks.

_____________________________________________________________________________________________________________
569-607 Description 39 For broker transactions, enter a brief description of the
disposition item (e.g., 100 shares of XYZ Corp). For
regulated futures and forward contracts, enter "RFC" or
other appropriate description. For bartering transactions,
show the services or property provided. If fewer than 39
characters are required, left-justify information and fill
unused positions with blanks.

_____________________________________________________________________________________________________________
608-615 Number of 8 Enter the number of shares of the corporation's stock which
Shares were exchanged in the transaction. Report whole number only.
Exchanged Right-justify information and fill unused positions with
zeros.

_____________________________________________________________________________________________________________
616-625 Classes of 10 Enter the class of stock that was exchanged. Left-justify
Stock Exchanged the information and fill unused positions with blanks.

_____________________________________________________________________________________________________________
626 Recipient 1 Enter a "1"(one) if recipient is unable to claim a loss on
Indicator their tax return. Otherwise, enter a blank.

_____________________________________________________________________________________________________________
627-662 Blank 36 Enter blanks.

_____________________________________________________________________________________________________________
663-722 Special Data 60 This portion of the "B" Record may be used to record
Entries information for state or local government reporting or for
the filer's own purposes. Payers should contact the state or
local revenue departments for filing requirements. If this
field is not utilized, enter blanks. (See Note.)

_____________________________________________________________________________________________________________
723-734 State Income 12 State income tax withheld is for the convenience of the
Tax Withheld filers. This information does not need to be reported to
IRS. The payment amount must be right-justified and unused
positions must be zero-filled. If not reporting state tax
withheld, this field may be used as a continuation of the
Special Data Entries Field.

_____________________________________________________________________________________________________________
735-746 Local Income 12 Local income tax withheld is for the convenience of the
Tax Withheld filers. This information does not need to be reported to
IRS. The payment amount must be right-justified and unused
positions must be zero-filled. If not reporting local tax
withheld, this field may be used as a continuation of the
Special Data Entries field.

_____________________________________________________________________________________________________________
747-748 Blank 2 Enter blanks.

_____________________________________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
characters.

_____________________________________________________________________________________________________________
Note: Report the Corporation's Name, Address, City, State, and ZIP in the Special Data Entry field.


Payee "B" Record --Record Layout Positions 544-750 for Form 1099-B



___________________________________________________________________________________________________________
Second TIN Blank Gross Proceeds Date of Sale CUSIP Number Description Number of
Notice Indicator or Exchange Shares
(Optional) Exchanged

___________________________________________________________________________________________________________
544 545-546 547 548-555 556-568 569-607 608-615

___________________________________________________________________________________________________________



____________________________________________________________________________________________________________
Classes of Recipient Blank Special Data State Income Local Income Blank Blank or
Stock Indicator Entries Tax Withheld Tax Withheld CR/LF
Exchanged

____________________________________________________________________________________________________________
616-625 626 627-662 663-722 723-734 735-746 747-748 749-750

____________________________________________________________________________________________________________



__________________________________________________________________________________
(7) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-C

__________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

__________________________________________________________________________________
544-546 Blank 3 Enter blanks.

__________________________________________________________________________________
547 Bankruptcy 1 Enter "1" (one) to indicate the debt was
Indicator discharged in bankruptcy, if known.
Otherwise, enter a blank.

__________________________________________________________________________________
548-555 Date 8 Enter the date the debt was canceled in the
Canceled format of YYYYMMDD (e.g., January 5, 2008,
would be 20080105). Do not enter hyphens or
slashes.

__________________________________________________________________________________
556-594 Debt 39 Enter a description of the origin of the
Description debt, such as student loan, mortgage, or
credit card expenditure. If a combined Form
1099-C and 1099-A is being filed, also enter
a description of the property.

__________________________________________________________________________________
595-662 Blank 68 Enter blanks.

__________________________________________________________________________________
663-722 Special 60 This portion of the "B" Record may be used to
Data record information for state or local
Entries government reporting or for the filer's own
purposes. Payers should contact the state or
local revenue departments for filing
requirements. If this field is not utilized,
enter blanks.

__________________________________________________________________________________
723-748 Blank 26 Enter blanks.

__________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed
(CR/LF) characters.

__________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-C



___________________________________________________________________________________________________________
Blank Bankruptcy Date Canceled Debt Description Blank Special Data Entries
Indicator

___________________________________________________________________________________________________________
544-546 547 548-555 556-594 595-662 663-722

___________________________________________________________________________________________________________



____________________________________________________________________________________
Blank Blank or CR/LF

____________________________________________________________________________________
723-748 749-750

____________________________________________________________________________________



___________________________________________________________________________________
(8) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-CAP

___________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

___________________________________________________________________________________
544-547 Blank 4 Enter blanks.

___________________________________________________________________________________
548-555 Date of 8 Enter the date the stock was exchanged for cash,
Sale or stock in the successor corporation, or other
Exchange property received in the format YYYYMMDD (e.g.,
January 5, 2008, would be 20080105). Do not enter
hyphens or slashes.

___________________________________________________________________________________
556-607 Blank 52 Enter blanks.

___________________________________________________________________________________
608-615 Number of 8 Enter the number of shares of the corporation's
Shares stock which were exchanged in the transaction.
Exchanged Report whole number only. Right-justify
information and fill unused positions with zeros.

___________________________________________________________________________________
616-625 Classes of 10 Enter the class of stock that was exchanged.
Stock Left-justify the information and fill unused
Exchanged positions with blanks.

___________________________________________________________________________________
626-662 Blank 37 Enter blanks.

___________________________________________________________________________________
663-722 Special 60 This portion of the "B" Record may be used to
Data record information for state or local government
Entries reporting or for the filer's own purposes. Payers
should contact the state or local revenue
departments for filing requirements. If this field
is not utilized, enter blanks.

___________________________________________________________________________________
723-748 Blank 26 Enter blanks.

___________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
characters.

___________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-CAP



_____________________________________________________________________________________
Blank Date of Sale or Blank Number of Shares Classes of Stock
Exchange Exchanged Exchanged

_____________________________________________________________________________________
544-547 548-555 556-607 608-615 616-625

_____________________________________________________________________________________



____________________________________________________________________________________
Blank Special Data Entries Blank Blank or CR/LF

____________________________________________________________________________________
626-662 663-722 723-748 749-750

____________________________________________________________________________________



___________________________________________________________________________________
(9) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-DIV

___________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

___________________________________________________________________________________
544 Second TIN 1 Enter "2" (two) to indicate notification by IRS
Notice twice within three calendar years that the payee
(Optional) provided an incorrect name and/or TIN combination;
otherwise, enter a blank.

___________________________________________________________________________________
545-546 Blank 2 Enter blanks.

___________________________________________________________________________________
547-586 Foreign 40 Enter the name of the foreign country or U.S.
Country or possession to which the withheld foreign tax
U.S. (Amount Code C) applies. Otherwise, enter blanks.
Possession

___________________________________________________________________________________
587-662 Blank 76 Enter blanks.

___________________________________________________________________________________
663-722 Special 60 This portion of the "B" Record may be used to
Data record information for state or local government
Entries reporting or for the filer's own purposes. Payers
should contact the state or local revenue
departments for filing requirements. If this field
is not utilized, enter blanks.

___________________________________________________________________________________
723-734 State 12 State income tax withheld is for the convenience
Income Tax of the filers. This information does not need to
Withheld be reported to IRS. The payment amount must be
right-justified and unused positions must be
zero-filled. If not reporting state tax withheld,
this field may be used as a continuation of the
Special Data Entries Field.

___________________________________________________________________________________
735-746 Local 12 Local income tax withheld is for the convenience
Income Tax of the filers. This information does not need to
Withheld be reported to IRS. The payment amount must be
right-justified and unused positions must be
zero-filled. If not reporting local tax withheld,
this field may be used as a continuation of the
Special Data Entries Field.

___________________________________________________________________________________
747-748 Combined 2 If this payee record is to be forwarded to a state
Federal/State agency as part of the Combined Federal/State
Code Filing Program, enter the valid state code from
Part A, Sec. 10, Table 1. For those payers or
states not participating in this program, enter
blanks.

___________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed (CR/LF)
characters.

___________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-DIV



______________________________________________________________________________________________________________
Second TIN Notice Blank Foreign Country or Blank Special Data Entries
(Optional) U.S. Possession

______________________________________________________________________________________________________________
544 545-546 547-586 587-662 663-722

______________________________________________________________________________________________________________



____________________________________________________________________________________
State Income Tax Local Income Tax Combined Blank or CR/LF
Withheld Withheld Federal/State Code

____________________________________________________________________________________
723-734 735-746 747-748 749-750

____________________________________________________________________________________



_____________________________________________________________________________________________________________
(10) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-G

_____________________________________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

_____________________________________________________________________________________________________________
544-546 Blank 3 Enter blanks.

_____________________________________________________________________________________________________________
547 Trade or 1 Enter "1" (one) to indicate the state or local income tax refund,
Business credit, or offset (Amount Code 2) is attributable to income tax
Indicator that applies exclusively to income from a trade or business.

Indicator Usage

1 Income tax refund applies exclusively to a trade
or business.

Blank Income tax refund is a general tax refund.

_____________________________________________________________________________________________________________
548-551 Tax Year of 4 Enter the tax year for which the refund, credit, or offset
Refund (Amount Code 2) was issued. The tax year must reflect the tax
year for which the payment was made, not the tax year of Form
1099-G. The tax year must be in the four-position format of YYYY
(e.g., 2008). The valid range of years for the refund is 1998
through 2007.

Note: This data is not considered prior year data since it is required to be reported in the current tax
year. Do NOT enter "P" in field position 6 of the Transmitter "T" Record.

_____________________________________________________________________________________________________________
552-662 Blank 111 Enter blanks.

_____________________________________________________________________________________________________________
663-722 Special Data 60 This portion of the "B" Record may be used to record information
Entries for state or local government reporting or for the filer's own
purposes. Payers should contact the state or local revenue
departments for filing requirements. You may enter your routing
and transit number (RTN) here. If this field is not utilized,
enter blanks.

_____________________________________________________________________________________________________________
723-734 State Income 12 State income tax withheld is for the convenience of the filers.
Tax Withheld This information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may
be used as a continuation of the Special Data Entries Field.

_____________________________________________________________________________________________________________
735-746 Local Income 12 Local income tax withheld is for the convenience of the filers.
Tax Withheld This information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may
be used as a continuation of the Special Data Entries Field.

_____________________________________________________________________________________________________________
747-748 Combined 2 If this payee record is to be forwarded to a state agency as part
Federal/State of the Combined Federal/State Filing Program, enter the valid
Code state code from Part A, Sec. 10, Table 1. For those payers or
states not participating in this program, enter blanks.

_____________________________________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed (CR/LF) characters.

_____________________________________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-G



____________________________________________________________________________________________________________
Blank Trade or Business Tax Year of Blank Special Data Entries State Income
Indicator Refund Tax Withheld

____________________________________________________________________________________________________________
544-546 547 548-551 552-662 663-722 723-734

____________________________________________________________________________________________________________



___________________________________________________________________________________
Local Income Tax Withheld Combined Federal/State Code Blank or CR/LF

___________________________________________________________________________________
735-746 747-748 749-750

___________________________________________________________________________________



__________________________________________________________________________________
(11) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-H

__________________________________________________________________________________
Field Field Title Length Description and Remarks
Position

__________________________________________________________________________________
544-546 Blank 3 Enter blanks.

__________________________________________________________________________________
547-548 Number of 2 Required. Enter the total number of months
Months recipient is eligible for health insurance
Eligible advance payments. Right-justify and blank
fill any remaining position.

__________________________________________________________________________________
549-662 Blank 114 Enter blanks.

__________________________________________________________________________________
663-722 Special 60 This portion of the "B" Record may be used to
Data record information for state or local
Entries government reporting or for the filer's own
purposes. Payers should contact the state or
local revenue departments for filing
requirements. If this field is not utilized,
enter blanks.

__________________________________________________________________________________
723-748 Blank 26 Enter blanks.

__________________________________________________________________________________
749-750 Blank 2 Enter blanks or carriage return/line feed
(CR/LF) characters.

__________________________________________________________________________________

Payee "B" Record --Record Layout Positions 544-750 for Form 1099-H



____________________________________________________________________________________________________________
Blank Number of Months Blank Special Data Entries Blank Blank or CR/LF
Eligible

____________________________________________________________________________________________________________
544-546 547-548 549-662 663-722 723-748 749-750

____________________________________________________________________________________________________________



__________________________________________________________________________________
(12) Payee "B" Record --Record Layout Positions 544-750 for Form 1099-INT

__________________________________________________________________________________
Field Field Title Length Description and Remarks
Position