Internal Revenue Bulletin 1999-49 (PDF rendition): IRS Revenue Rulings

Preserve advance releases and the authoritative Internal Revenue Bulletin rendition; directory timestamps are file-publication metadata, not legal effective dates. HTML bulletins begin June 2003; earlier available issues require full PDF parsing. Whole bulletin rendition: numbered items are identified below; other legal material and publisher context remain included. This is not a new standalone advance release.

INCOME TAX
Rev. Rul. 99–48, page 600.
Federal rates; adjusted federal rates; adjusted federal
long-term rate, and the long-term exempt rate.For
purposes of sections 1274, 1288, 382, and other sections
of the Code, tables set forth the rates for December 1999.
EMPLOYEE PLANS
Rev. Proc. 99–45, page 603.
Minimum funding standards; change in funding
method.This procedure provides approval to change the
funding method used to determine the minimum funding
standard for defined benefits plans for plan years beginning
on or after January 1, 1999, to any one of the specific meth-
ods contained therein. Rev. Proc. 95–51, as clarified and
modified by Rev. Proc. 98–10, modified.
Notice 99–55, page 638.
Retirement plans; 2000 section 415(d) limitations.
Cost-of-living adjustments effective January 1, 2000, applic-
able to the dollar limits on benefits under qualified defined
benefit pensions plans and to other provisions affecting (1)
certain plans of deferred compensation and (2) “control em-
ployees,” are set forth.
ESTATE TAX
REG–103841–99, page 639.
Proposed regulations under section 2601 of the Code relate
to the retention of a trust’s exempt status for generation-skip-
ping transfer tax purposes in the case of modifications, etc.,
to a trust. A public hearing is scheduled for March 15, 2000.
GIFT TAX
REG–103841–99, page 639.
Proposed regulations under section 2601 of the Code relate
to the retention of a trust’s exempt status for generation-
skipping transfer tax purposes in the case of modifications,
etc., to a trust. A public hearing is scheduled for March 15,
2000.
EMPLOYMENT TAX
Rev. Proc. 99–46, page 605.
Electronic filing; magnetic media.Specifications are set
forth for filing Form 8027, Employer’s Annual Information Re-
turn of Tip Income and Allocated Tips, magnetically or elec-
tronically. The form may be filed with the Service using
1
⁄
2
inch magnetic tape; IBM 3480/3490 or AS400 compati-
ble tape cartridges; or 5
1
⁄
4
-, 3
1
⁄
2
-inch diskettes.
Rev. Proc. 99–47, page 624.
Specifications are set forth for filing Form W-4, Employee’s
Withholding Allowance Certificate, magnetically or electroni-
cally.
ADMINISTRATIVE
REG–104939–99, page 643.
Proposed regulations under section 6212 of the Code relate
to a taxpayer’s last known address.
Announcement 99–112, page 649.
This document corrects certain errors in Rev. Proc. 99–29,
1999–31 I.R.B. 138, which provides specifications for filing
Forms 1098, 1099, 5498, and W-2G. Rev. Proc. 99–29 was
reprinted as Publication 1220, Specifications for Filing Forms
1098, 1099, 5498, and W-2G Magnetically or Electronically.
Corrections to the forms are also included. Rev. Proc. 99–29
corrected.
Internal Revenue
bbuulllleettiinn
Bulletin No. 1999–49
December 6, 1999
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
Department of the Treasury
Internal Revenue Service
Finding Lists begin on page ii.
Index for July through November begins on page iv.

The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing offi-
cial rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly and may be obtained
from the Superintendent of Documents on a subscription
basis. Bulletin contents are consolidated semiannually into
Cumulative Bulletins, which are sold on a single-copy basis.
It is the policy of the Service to publish in the Bulletin all sub-
stantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of in-
ternal management are not published; however, statements
of internal practices and procedures that affect the rights
and duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings
to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature
are deleted to prevent unwarranted invasions of privacy and
to comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have
the force and effect of Treasury Department Regulations,
but they may be used as precedents. Unpublished rulings
will not be relied on, used, or cited as precedents by Service
personnel in the disposition of other cases. In applying pub-
lished rulings and procedures, the effect of subsequent leg-
islation, regulations, court decisions, rulings, and proce-
dures must be considered, and Service personnel and oth-
ers concerned are cautioned against reaching the same con-
clusions in other cases unless the facts and circumstances
are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions, and Subpart B, Legislation and Related
Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and Sub-
parts. Also included in this part are Bank Secrecy Act Admin-
istrative Rulings. Bank Secrecy Act Administrative Rulings
are issued by the Department of the Treasury’s Office of the
Assistant Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The first Bulletin for each month includes a cumulative index
for the matters published during the preceding months.
These monthly indexes are cumulated on a semiannual basis,
and are published in the first Bulletin of the succeeding semi-
annual period, respectively.
The IRS Mission
Provide America’s taxpayers top quality service by help-
ing them understand and meet their tax responsibilities
and by applying the tax law with integrity and fairness to
all.
Introduction
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402.

INSERT PHOTO HERE

Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1999.
See Rev. Rul. 99–48 on this page.
Section 382.—Limitation on Net
Operating Loss Carryforwards
and Certain Built-In Losses
Following Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of December 1999. See Rev.
Rul. 99–48 on this page.
Section 412.—Minimum Funding
Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
A revenue procedure describes certain changes to
the funding method used to determine the minimum
funding standard for defined benefit plans for plan
years beginning on or after January 1, 1999. See
Rev. Proc. 99–45, page 603.
Section 467.—Certain Payments
for the Use of Property or
Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 468.—Special Rules for
Mining and Solid Waste
Reclamation and Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 482.—Allocation of
Income and Deductions Among
Taxpayers
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1999.
See Rev. Rul. 99–48 on this page.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 642.—Special Rules for
Credits and Deductions
Federal short-term, mid-term, and long-term
rates are set forth for the month of December 1999.
See Rev. Rul. 99–48 on this page.
Section 807.—Rules for Certain
Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48 on this
page.
Section 1274.—Determination
of Issue Price in the Case of
Certain Debt Instruments Issued
for Property
(Also sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate, and
the long-term exempt rate.For purposes
of sections 1274, 1288, 382, and other
sections of the Code, tables set forth the
rates for December 1999.
Rev. Rul. 99–48
This revenue ruling provides various
prescribed rates for federal income tax
purposes for December 1999 (the current
month.) Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month for
purposes of section 1274(d) of the Inter-
nal Revenue Code. Table 2 contains the
short-term, mid-term, and long-term ad-
justed applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Table 5
contains the federal rate for determining
the present value of an annuity, an interest
for life or for a term of years, or a remain-
der or a reversionary interest for purposes
of section 7520. Finally, Table 6 contains
the 2000 interest rate for purposes of sec-
tions 846 and 807.
December 6, 19996001999–49 I.R.B.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986

1999–49 I.R.B.601December 6, 1999
REV. RUL. 99–48 TABLE 1
Applicable Federal Rates (AFR) for December 1999
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-Term
AFR5.74%5.66%5.62%5.59%
110% AFR6.33%6.23%6.18%6.15%
120% AFR6.91%6.79%6.73%6.70%
130% AFR7.50%7.36%7.29%7.25%
Mid-Term
AFR6.20%6.11%6.06%6.03%
110% AFR6.83%6.72%6.66%6.63%
120% AFR7.46%7.33%7.26%7.22%
130% AFR8.10%7.94%7.86%7.81%
150% AFR9.38%9.17%9.07%9.00%
175% AFR10.98%10.69%10.55%10.46%
Long-Term
AFR6.47%6.37%6.32%6.29%
110% AFR7.13%7.01%6.95%6.91%
120% AFR7.79%7.64%7.57%7.52%
130% AFR8.45%8.28%8.20%8.14%
REV. RUL. 99–48 TABLE 2
Adjusted AFR for December 1999
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term
adjusted AFR4.02%3.98%3.96%3.95%
Mid-term
adjusted AFR4.76%4.70%4.67%4.65%
Long-term
adjusted AFR5.72%5.64%5.60%5.57%
REV. RUL. 99–48 TABLE 3
Rates Under Section 382 for December 1999
Adjusted federal long-term rate for the current month5.72%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the
adjusted federal long-term rates for the current month and the prior two months.)5.72%
REV. RUL. 99–48 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for December 1999
Appropriate percentage for the 70% present value low-income housing credit8.49%
Appropriate percentage for the 30% present value low-income housing credit3.64%

December 6, 19996021999–49 I.R.B.
REV. RUL. 99–48 TABLE 5
Rate Under Section 7520 for December 1999
Applicable federal rate for determining the present value of an annuity, an interest for life or a
term of years, or a remainder or reversionary interest7.4%
REV. RUL. 99–48 TABLE 6
Rate under Sections 846 and 807
Applicable rate of interest for 2000 for purposes of sections 846 and 8076.09%
Section 1288.—Treatment of
Original Issue Discount on
Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48, page 600.
Section 7520.—Valuation Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48, page 600.
Section 7872.—Treatment of
Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of December 1999. See Rev. Rul. 99–48, page 600.
insert photo here

26 CFR 601.201: Rulings and determination
letters.
(Also, Part I, section 412.)
Rev. Proc. 99–45
Section 1. Purpose and Scope
This revenue procedure modifies Rev.
Proc. 95–51, 1995–2 C.B. 431, which
provides approval to change the funding
method (including the asset valuation
method) used for a defined benefit pen-
sion plan. This revenue procedure modi-
fies Rev. Proc. 95–51 to provide approval
for a change in funding method in con-
nection with certain mergers; to clarify
that the prohibition of a change in method
where there is a negative unfunded liabil-
ity applies only in certain circumstances
with respect to a change in funding
method involving a spread gain method;
to provide that the comparison of the re-
sults of new valuation software to the re-
sults of old valuation software may be
made on the basis of the prior year; and to
provide, in certain situations, that the re-
quirement that the plan administrator ap-
prove of the change in funding method
will be satisfied if the plan administrator
is made aware of the change.
Section 2. Background
.01 Section 412(c)(5)(A) of the Inter-
nal Revenue Code (“the Code”), as
amended, and section 302(c)(5)(A) of the
Employee Retirement Income Security
Act of 1974 (ERISA), Pub. L. 93-406,
1974–3 C.B. 1, 40, as amended, state that
if the funding method of a plan is
changed, the new funding method shall
become effective only if the change is ap-
proved by the Secretary.
.02 Section 1.412(c)(2)–1 of the In-
come Tax Regulations generally provides
that a change in the actuarial valuation
method used to value the assets of a plan
is a change in funding method that re-
quires approval under § 412(c)(5) of the
Code.
.03 Rev. Proc. 95–51 provides ap-
proval for certain changes in funding
method. Section 3 of Rev. Proc. 95–51
provides approval for changes to certain
specific methods including certain asset
valuation methods. Section 4 of Rev.
Proc. 95–51 provides various special ap-
provals for changes. Section 5 of Rev.
Proc. 95–51 provides rules relating to the
establishment and maintenance of amorti-
zation bases upon changing methods.
Section 6 of Rev. Proc. 95–51 provides
restrictions under the revenue procedure.
.04 Rev. Proc. 98–10, 1998–2 I.R.B.
35, modified Rev. Proc. 95–51 to provide
approval for additional changes in asset
valuation method and for certain changes
in valuation software. Rev. Proc. 98–10
also clarified and modified other provi-
sions of Rev. Proc. 95–51.
Section 3. Additional Approvals under
Rev. Proc. 95–51
.01 Section 4 of Rev. Proc. 95–51 (Spe-
cial Approvals) is modified to add a new
section 4.06 as follows:
.06 Approval for De MinimisMergers
(1) Approval is granted for a change
in method in connection with a
merger described in paragraph (2)
where the procedures set forth in
paragraphs (3) through (5) below are
followed.
(2) The merger involves the merger
of a smaller plan (within the mean-
ing of § 1.414(l)–1(h)(1)) and a
larger plan (within the meaning of
§ 1.414(l)–1(h)(1)). For purposes of
this paragraph (2), the rules of
§§ 1.414(l)–1(h)(2), 1.414(l)–
1(h)(3), and 1.414(l)– 1(h)(4) apply
in determining whether a merger is
de minimis.
(3) For the period from the begin-
ning of the plan year of the smaller
plan to the date of the merger, the
charges and credits to the funding
standard account for the smaller plan
are determined without regard to the
merger. If that period is less than a
full 12-month plan year, the charges
and credits to the funding standard
account for the smaller plan for this
period are ratably adjusted using the
principles of Rev. Rul. 79–237,
1979–2 C.B. 190, in the same man-
ner as if the date of the merger was
the date of plan termination of the
smaller plan. The deductible limit
under § 404 for contributions to the
smaller plan is determined by treat-
ing the period from the beginning of
the plan year to the date of merger as
a short plan year and following the
procedure set forth in section 5 of
Rev. Proc. 87–27, 1987–1 C.B. 769.
Schedule B of Form 5500 is filed for
the smaller plan for the period from
the beginning of the plan year of the
smaller plan to the date of the
merger. Any contributions made for
the smaller plan after the date of the
merger, but not later than 8
1
⁄
2
months
after the date of the merger, are cred-
ited to the funding standard account
of the smaller plan for this period.
For purposes of applying § 4971(b)
(but not § 4971(a)) with respect to
the smaller plan, any funding defi-
ciency that existed for the smaller
plan is considered corrected as of the
date of merger.
(4) If the valuation date for the larger
plan for the plan year in which the
merger occurs precedes the date of
the merger, the charges and credits to
the funding standard account for the
larger plan for that plan year are de-
termined without regard to the
merger. Consequently, Schedule B
of Form 5500 for the plan year of the
larger plan in which the merger oc-
curs is filed without regard to the
merger in such a case. Similarly, the
deductible limit determined under
§ 404 with respect to the plan year of
the larger plan in which the merger
occurs is determined without regard
to the merger.
(5) For the actuarial valuation of the
larger plan as of the valuation date
coincident with or next following the
date of the merger, the funding
method (including asset valuation
method) used is that for the larger
plan, and the funding method (in-
cluding asset valuation method) used
for the smaller plan is disregarded.
The charges and credits to the fund-
ing standard account for the larger
plan are determined by treating the
net effect of the change in assets and
liabilities due to the merger in the
same manner as any other gain or
loss experienced by the larger plan.
Consequently, any amortization
bases, credit balances, or funding de-
1999–49 I.R.B.603December 6, 1999
Part III. Administrative, Procedural, and Miscellaneous

ficiencies with respect to the smaller
plan are disregarded for purposes of
applying § 412 and § 4971 with re-
spect to the larger plan.
.02 Section 4 of Rev. Proc. 95–51 (Spe-
cial Approvals) is modified to add a new
section 4.07 as follows:
.07 Approval for Mergers Other Than
De MinimisMergers
(1) Approval is granted for a change
in method that results from a merger
of one plan with another plan in a
given plan year where all the condi-
tions set forth in paragraphs (2)
through (6) are satisfied, and the pro-
cedures set forth in paragraphs (7)
through (13) are followed.
(2) The merger is not a de minimis
merger within the meaning of
§ 1.414(l)–(h).
(3) The funding method (without re-
gard to the asset valuation method)
used for each of the plans is a
method described in section 3.
(4) Both plans have the same plan
year and a valuation date that is ei-
ther the first or last day of the plan
year.
(5) The date of the merger is either
the first day of the plan year or the
last day of the plan year of the two
plans.
(6) In a case in which the date of the
merger is the first day of the plan
year, neither plan has a funding defi-
ciency for the prior plan year. In a
case in which the date of the merger
is the last day of the plan year, nei-
ther plan has a funding deficiency
for the plan year of the merger (after
taking into account contributions
made after the date of the merger as
provided in paragraph (13) below).
(7) If the date of the merger is the
first day of the plan year, the mini-
mum funding standard of § 412 and
the deductible limit of § 404 are de-
termined for the merged plan for the
entire plan year in which the merger
occurs in the manner provided in
paragraphs (8), (9), (10), (11), and
(12) below. Consequently, for the
plan year in which the merger oc-
curs, only one Schedule B of Form
5500 is filed for the merged plan in
such a case.
(8) If the same asset valuation
method (in all respects) is used for
each of the two plans, the asset valu-
ation method of the merged plan is
that method. If the same asset valua-
tion method (in all respects) is not
used for each of the two plans (for
example, the smoothing period is
three years for one of the plans, and
five years for the other plan), the
asset valuation method used for the
merged plan must be an asset valua-
tion method described in section 3.
(9) If the funding method (without
regard to the asset valuation method)
used for each of the two plans is the
same, that funding method is contin-
ued for the plan after the merger. If
the funding method (without regard
to the asset valuation method) used
for each of the two plans is not the
same, then the funding method used
for the ongoing plan is continued
after the merger. For this purpose,
the ongoing plan is the plan as desig-
nated by the plan administrator
(within the meaning of § 414(g)),
whose name and plan number will
continue to be reported on Schedule
B of Form 5500 for years after the
merger. The funding method used
for the plan which is not the ongoing
plan is disregarded.
(10) An experience gain or loss is de-
termined separately for each of the
two plans, for the period prior to the
date of the merger, without regard to
the merger and any associated
change in funding method. The pre-
ceding sentence applies only to the
extent that an experience gain or loss
would have been determined under
the methods used for the plans prior
to the merger.
(11) All amortization bases that were
maintained for the two plans con-
tinue to be maintained for the
merged plan to the extent they would
be maintained under the funding
method used for the merged plan.
The credit balances, if any, of each
of the two plans from the prior year
are carried forward to the current
plan year, and combined.
(12) If an unfunded liability is deter-
mined under the funding method
used for the ongoing plan, it must be
determined after any change in actu-
arial assumptions and methods (in-
cluding a change in asset valuation
method pursuant to paragraph (8)).
In the case of such a funding method
that is a spread gain method, the un-
funded liability is redetermined in
the same manner that the unfunded
liability was originally determined
for the ongoing plan. Therefore, the
amortization base established pur-
suant to the rules of section 5.01(2)
will reflect any change of actuarial
assumptions and methods. For pur-
poses of this paragraph, a spread
gain method is any method that does
not directly calculate an accrued lia-
bility. See Rev. Rul. 81–13, 1981–1
C.B. 229, for whether a funding
method directly calculates an ac-
crued liability.
(13) If the date of the merger is the
last day of the plan year, the mini-
mum funding standard under § 412
and the deductible limit under § 404
for each of the plans for the plan year
in which the merger occurs are deter-
mined without regard to the merger.
Consequently, separate Schedules B
of Form 5500 are filed for the plans
for the plan year in which the merger
occurs without regard to the merger
in such a case. Any contribution for
the plan year that is made to the trust
after the date of the merger may be
credited on either of the Schedules B
provided that the contribution is
made for such plan within the period
described in § 412(c)(10). For the
plan year following the plan year in
which the merger occurs, the mini-
mum funding standard and the de-
ductible limit are determined for the
plan after the merger by following
the procedures set forth in para-
graphs (8), (9), (10), (11) and (12)
above as if the merger occurred on
the first day of such following plan
year.
Section 4. Clarification and
Modification of Rev. Proc. 95–51
.01 Section 4.05(5) of Rev. Proc. 95–51
(Approval for Change in Valuation Soft-
ware) is modified to read as follows:
(5) The net charge to the funding
standard account for the year (or for
the prior year) determined using the
new software does not differ from
the net charge to the funding stan-
dard determined using the old soft-
December 6, 19996041999–49 I.R.B.

ware (all other factors being held
constant) by more than two percent
(2%).
.02 Section 6.01(2) of Rev. Proc. 95–51
is modified to read as follows:
(2) This revenue procedure does not
apply unless the plan administrator
(within the meaning of § 414(g)) or
an authorized representative of the
plan sponsor indicates as part of the
series Form 5500 for the plan year
for which the change is effective that
the plan administrator or plan spon-
sor agrees to the change in funding
method. In the case of a special ap-
proval for a change in funding
method described in § 4, other than
the approval described in § 4.03
(Approval for Change in Funding
Method for Fully Funded Termi-
nated Plans), the requirement that
the plan administrator or authorized
representative of the plan sponsor
agree to the change will be satisfied
if the plan administrator or an autho-
rized representative of the plan spon-
sor is made aware of the change be-
fore the Schedule B is filed.
.03 Section 6.02(6) of Rev. Proc. 95–51
(Non-Applicability if Negative Normal
Cost or Negative Unfunded Liability Re-
sults From the Change) is modified to
read as follows:
Approval to change to a method de-
scribed in section 3 does not apply if,
after the change in method, a negative
normal cost exists. Also, approval to
change to a method described in sec-
tion 3 does not apply if, after the
change in method, a negative unfunded
liability exists, and the method (a) is a
spread gain method, and (b) uses an un-
funded liability in determining the nor-
mal cost. For purposes of the preced-
ing sentence, a spread gain method is
any method that does not directly cal-
culate an accrued liability. See Rev.
Rul. 81-13 for whether a funding
method directly calculates an accrued
liability.
.04 Section 6.02(7) of Rev. Proc. 95–51
(Non-Applicability if Change in Method
is Being Made Pursuant to a Spin-off or
Merger) is modified to read as follows:
Approval to change to a method de-
scribed in section 3 does not apply if
the funding method for a plan year is
being changed in connection with a
plan spin-off or merger, unless the
change is made as provided in § 4.06 or
§ 4.07.
Section 5. Effective Date
This revenue procedure is effective for
plan years commencing on or after Janu-
ary 1, 1999.
Section 6. Effect on Other Revenue
Procedures
Rev. Proc. 95–51, as clarified and mod-
ified by Rev. Proc. 98–10, is modified.
Section 7. Drafting Information
The principal author of this revenue
procedure is James E. Holland, Jr. of the
Employee Plans Division. For further in-
formation regarding this revenue proce-
dure, call (202) 622-6076 between 2:30
and 3:30 Eastern time (not a toll free
number) Monday through Thursday. Mr.
Holland’s number is (202) 622-6730 (also
not a toll free number).
1999–49 I.R.B.605December 6, 1999
Publication 1239 (Rev. 8–99)
Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips Magneti-
cally/Electronically
Rev. Proc. 99–46
Reprinted from IR Bulletin l999–49
dated December 6, 1999
(Contains copies of Forms 4419, 4804, 4802, 8508 and 8809 for taxpayers’ use.)
NOTE: Use this revenue procedure to prepare Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, for submission to Internal Revenue Service (IRS) using any of the following:
– Magnetic Tape
– 3
1
⁄
2
-inch Diskette
– Tape Cartridges
– 8mm, 4mm and Quarter Inch Cartridges (QIC)
– Electronic Filing
Please read this publication carefully. Persons required to file may be subject to penalties if they do not follow the instructions in
this revenue procedure.

TABLE OF CONTENTS
PART A. GENERAL
SECTION 1.PURPOSE
SECTION 2.NATURE OF CHANGES
SECTION 3.WHERE TO FILE AND HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER
SECTION 4.FILING REQUIREMENTS
SECTION 5.REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA
SECTION 6.APPLICATION FOR MAGNETIC/ELECTRONIC REPORTING
SECTION 7.FILING OF FORM 8027 MAGNETICALLY/ELECTRONICALLY
SECTION 8.FILING DATES
SECTION 9.EXTENSIONS OF TIME TO FILE
SECTION 10.PROCESSING OF MAGNETIC/ELECTRONIC RETURNS
SECTION 11.PENALTIES
SECTION 12.CORRECTED RETURNS, SUBSTITUTE FORMS, AND COMPUTER-GENERATED FORMS
SECTION 13. EFFECT ON PAPER RETURNS
SECTION 14. DEFINITIONS
PART B. MAGNETIC/ELECTRONIC SPECIFICATIONS
SECTION 1.GENERAL
SECTION 2.TAPE SPECIFICATIONS
SECTION 3.DISKETTE SPECIFICATIONS
SECTION 4.TAPE CARTRIDGE SPECIFICATIONS
SECTION 5.8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS
SECTION 6.ELECTRONIC FILING SPECIFICATIONS
SECTION 7. RECORD FORMAT AND LAYOUT
SECTION 8. EFFECT ON OTHER DOCUMENTS
SECTION 9. EFFECTIVE DATE
26 CFR 601.602: Tax forms and instructions.
PART A. GENERAL
SEC. 1. PURPOSE
.01 Form 8027 is used by large food or beverage establishments when the employer is required to make annual reports to the IRS
on receipts from food or beverage operations and tips reported by employees.
Note: All employees receiving $20.00 or more a month in tips must report 100% of their tips to their employer
.02 The Internal Revenue Service Martinsburg Computing Center (IRS/MCC) has the responsibility of processing Forms 8027
submitted magnetically/electronically. The purpose of this revenue procedure is to provide the specifications for filing Form 8027,
Employer’s Annual Information Return of Tip Income and Allocated Tips, magnetically or electronically. This revenue procedure is
updated when legislative changes occur or reporting procedures are modified. Major changes have been emphasized by italics.
.03 This revenue procedure supersedes the following: Rev. Proc. 98–52 published as Publication 1239 (9–98), Specifications for
Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips, Magnetically or Electronically.
SEC. 2. NATURE OF CHANGES
.01 Numerous editorial changes have been made to the revenue procedure. Please read the publication carefully and in its entirety
before attempting to prepare your magnetic/electronic file for submission. Major changes have been emphasized by using italics.
The changes are as follows:
(a) Updated information on IRS/MCC’s mailing addresses, telephone numbers and the Call Site is provided in Part A, Sec. 3.
(b) Part A, Sec. 7 Test Files has been deleted.
(c) The due date for Forms 8027 filed electronicallyhas been changed to March 31.
(d) Copies of approved extension letters should be sent with paper filings to Andover Service Center. See Part A, Sec. 9 for
complete instructions.
December 6, 19996061999–49 I.R.B.

(e) The Information Reporting Program-Bulletin Board System (IRP-BBS) is no longer in use. The information in Part B, Sec.
6 Asynchronous (IRP-BBS) electronic filing specifications has been completely revised to provide instructions on the new
electronic filing system known as the Filing Information Returns Electronically (FIRE) system.
(f) The new number for the electronic filing system is 304-262-2400
(g) The following types of media are no longer acceptable by IRS/MCC:
(1) 5
1
⁄
4
inch diskettes
(2) 3
1
⁄
2
inch diskettes created on a non-MS-DOS systems
(3) 3
1
⁄
2
inch diskettes created on a System 36 or AS400.
(h) The following QIC (quarter inch cartridge) sizes has been deleted from Part B, Section 5:
SizeTracksDensityCapacity
QIC-114/54 (8000 BPI)22Mb or 30Mb
QIC-3202617 (16000 BPI) 320Mb
QIC-13503018 (51667 BPI)1.3Gb
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS MARTINSBURG COMPUTING CENTER
.01 All Forms 8027 filed magnetically or electronically are processed at IRS/MCC and are to be sent to the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Dr
Kearneysville WV 25430
.02 Requests for paper forms and publications should be requested by calling the “Forms Only Number” listed in your local tele-
phone directory or by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).
.03 Questions pertaining to magnetic media filing of Forms W-2 mustbe directed to the Social Security Administration (SSA).
Filers can call 1-800-SSA-6270to obtain the phone number of the SSA Employer Services Liaison Officers for their area.
.04 A taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting
Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800-
829-3676).
.05 The Information Reporting Program (IRP) Call Site, located at the Martinsburg Computing Center, provides service to the
payer/employer community (financial institutions, employers, and other transmitters of information returns). The IRP Call Site an-
swers questions concerning tax law and magnetic/electronic filing of Forms 8027 and other information returns (Forms 1096, 1098,
1099, 5498, W-2G, W-3, 1042-S), questionable Forms W-4, inquiries dealing with backup withholding due to missing and incorrect
taxpayer identification numbers and questions concerning paper filing of Forms W-2. Recipients of information returns (payees)
should continue to contact 1-800-829-1040 or other numbers specified in the tax return instructions with any questions on how to re-
port tax returns.
The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700or Telecommunications Device for
the Deaf (TDD) 304-267-3367.These are toll calls. Hours of operation for the Call Site are Monday through Friday, 8:30 a.m. to
4:30 p.m. Eastern Time. The Call Site is in operation throughout the year to handle the questions of payers, transmitters, and em-
ployers. Due to the high demand for assistance at the end of January and February, it is advisable to call as soon as possible to avoid
these peak filing seasons.
.06 The telephone numbers for magnetic media inquiries or electronic submissions are:
304-263-8700 - Call Site
304-262-2400 - Electronic Filing
304-267-3367 - TDD (Telecommunication Device for the Deaf)
304-264-5602 - Fax Machine
(These are not toll-free telephone numbers.)
TO OBTAIN FORMS & PUBLICATIONS, CALL:
1-800-TAX-FORM(1-800-829-3676)
TO OBTAIN FORMS & PUBLICATIONS VIA THE INTERNET:
www.irs.gov
1999–49 I.R.B.607December 6, 1999

SEC. 4. FILING REQUIREMENTS
.01 Section 6011(e)(2)(A) of the Internal Revenue Code requires that any person, including corporations, partnerships, individu-
als, estates, and trusts, required to file 250 or more information returns must file such returns on magnetic media.
.02 The filing requirements apply separately to both original and corrected returns.
.03 Filing electronically through the FIRE system with IRS/MCC fulfills the magnetic media filing requirement.
.04 The above requirements do not apply if you establish undue hardship (see Part A, Sec. 5).
SEC. 5. REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC MEDIA
.01 If an employer is required to file on magnetic media but fails to do so (or fails to file electronically, in lieu of magnetic media
filing) and does not have an approved waiver on record, the employer will be subject to a penalty of $50 per return in excess of 250.
.02 If employers are required to file original or corrected returns on magnetic media, but such filing would create a hardship, they
may request a waiver from these filing requirements by submitting Form 8508, Request for Waiver From Filing Information Returns
on Magnetic Media, to IRS/MCC.
.03 Even though an employer may submit as many as 250 corrections on paper, IRS encourages magnetically or electronically
submitted corrections. Once the 250 threshold has been met, filers are required to submit any additional returns magnetically or
electronically. However, if a waiver for an original filing is approved, any corrections for the same type of returns will be covered
under this waiver.
.04 Generally, only the employer may sign the Form 8508. A transmitter may sign if given power of attorney; however, a letter
signed by the employer stating this fact must be attached to the Form 8508.
.05 A transmitter must submit a separate Form 8508 for each employer. Do not submit a list of employers.
.06 All information requested on the Form 8508 must be provided to IRS for the request to be processed.
.07 The waiver, if approved, will provide exemption from magnetic media filing for the current tax year only. Employers may not
apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.
.08 Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original
form.
.09 Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns.
.10 File Form 8508 for Forms W-2 with IRS/MCC, not SSA.
.11 Waivers are evaluated on a casebycase basis and are approved or denied based on criteria set forth under section 6011(e) of
the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a waiver request.
.12 If a waiver request is approved, the transmitter should keep the approval letter on file.
.13 An approved waiver from filing Forms 8027 on magnetic media does not provide exemption from all filing. The employer
must timely file Form 8027 on acceptable paper forms with the Andover Service Center. The transmitter should also send a copy of
the approved waiver to the Andover Service Center where the paper returns are filed.
SEC. 6. APPLICATION FOR MAGNETIC/ELECTRONIC REPORTING
.01 For the purposes of this revenue procedure, the EMPLOYER is the organization supplying the information and the TRANS-
MITTER is the organization preparing the magnetic/electronic file and/or sending the file to IRS/MCC. The employer and the trans-
mitter may be the same entity. Employers or their transmitters are required to complete Form 4419, Application for Filing Informa-
tion Returns Magnetically/Electronically.
.02 Form 4419 can be submitted at any time during the year; however, it should be submitted to IRS/MCC at least 30 days before
the due date of the return(s). IRS will act on an application and notify the applicant, in writing, of authorization to file. A five-
character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an acknowledgment letter within 15 to 45
days of receipt of the application. Magnetic/electronic returns may not be filed with IRS until the application has been approved and
a TCC assigned. Include your TCC in any correspondence with IRS/MCC.
.03 If you file information returns other than Form 8027 on magnetic media, you must obtain a separate TCC for those types of re-
turns. The TCC assigned for Forms 8027 is to be used for the processing of these forms only.
.04 Upon approval, a magnetic media reporting package containing the current revenue procedure, forms, and instructions will be
sent to the attention of the contact person indicated on Form 4419. Annually, thereafter, IRS/MCC will send the transmitter a pack-
age containing the current revenue procedure and forms. This package will continue to be sent to the contact person indicated on the
Form 4419 unless IRS/MCC has been notified in writing of any changes or updates. After you have received approval to file mag-
netically/electronically, you do not need to reapply each year; however, notify IRS in writing if:
(a) You change your name or the name of your organization, so that your files may be updated to reflect the proper name;
(b) You discontinue filing on magnetic media for two years (your TCC may have been reassigned).
.05 For filers who plan to submit for multiple employers, IRS encourages transmitters to submit one application and to use one
TCC for all employers.
December 6, 19996081999–49 I.R.B.

.06 Only employers or transmitters using equipment compatible with IRS equipment will have their application approved.
.07 If your magnetic media files have been prepared for you in the past by a transmitter, and you now have computer equipment
compatible with that of IRS and wish to prepare your own files, you must request your own five-character alpha/numeric TCC by fil-
ing an application, Form 4419, as described in Sec. 6.02.
SEC. 7. FILING OF FORM 8027 MAGNETICALLY/ELECTRONICALLY
.01 Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically, must accompany allmagnetic media
shipments. If you file for multiple employers and have the authority to sign the affidavit on Form 4804, you should also submit
Form 4802, Transmittal of Information Returns Reported Magnetically/Electronically (Continuation). For electronic transmissions,
the Form 4804 and Form 4802, if applicable, must be mailed or faxed the same day as the electronic transmission.
.02 The employer MUSTsign Form 4804; however, an agent (transmitter, service bureau, paying agent, or disbursing agent) may
sign Form 4804 for the employer. To do this, the agent must have the authority to sign for the employer under an agency agreement
(either oral, written, or implied) that is valid under the state law and must add to his or her signature the caption “For: (name of em-
ployer)”.
NOTE: Failure to sign the Form 4804 may delay processing or will result in your file being returned to you unprocessed.
.03 Although a duly authorized agent may sign the Form 4804, the employer is responsible for the accuracy of the Form 4804 and
the returns filed. The employer will be liable for penalties for failure to comply with filing requirements.
.04 Be sure to include Form 4804, 4802 or computer-generated substitutes with your magnetic media shipment. DO NOT MAIL
YOUR MAGNETIC MEDIA AND THE TRANSMITTAL DOCUMENTS SEPARATELY.
.05 Indicate on Form 4804, in the block captioned “Combined Total Payee Records,” the total number of establishments being re-
ported in this shipment. This figure should match the total number of records in your magnetic/electronic file.
.06 DO NOT SUBMIT THE SAME INFORMATION ON PAPER FORMS THAT YOU SUBMIT MAGNETICALLY/
ELECTRONICALLY.This does not mean that corrected documents are not to be filed. If a return has been prepared and submit-
ted improperly, you must file a corrected return as soon as possible. Refer to Part A, Sec. 12 for requirements and instructions for fil-
ing corrected returns.
.07 If an allocation of tips is based on a good faith agreement, a copy of this agreement must accompany the submission.
.08 If, under Rev. Proc. 86–21, 1986–1 C.B. 560, the District Director granted the establishment a percentage of gross receipts of
less than 8%, a copy of the determination letter must be sent with the submission. Employers with more than one establishment can
receive approval from one district in each Internal Revenue Service region where the establishments are located (See sec.
31.6053–3(h)(4) of the Employment Tax Regulations).
.09 Before submitting your magnetic/electronic file, include the following:
(a) AsignedForm 4804, Transmittal of Information Returns Reported Magnetically/Electronically, along with a Form 4802,
Transmittal of Information Returns Reported Magnetically/Electronically(Continuation), if you submit data for multiple em-
ployers. These forms must be mailed or faxed the same day electronic files are submitted.
(b) Your media (tape, diskette, or cartridge) with an external identifying label. Notice 210 describes the information which
should be included on this self-prepared label.
(c) On the outside of the shipping container, affix the label, IRB Special Projects. This label is included in this publication.
Note: See Part B, Sec. 6 for electronic submission requirements.
.10 IRS/MCC will not pay or accept “Collect on Delivery” or “Charged to IRS” shipments of reportable tax information that an
individual or organization is legally required to submit.
SEC. 8. FILING DATES
.01 Magnetic/electronic reporting to IRS for Form 8027 must be on a calendar year basis. The due date of either paper or magnet-
ically reported Forms 8027 is the last day of February. However, Forms 8027 filedelectronicallyare due March 31.
.02 If the due date falls on a Saturday, Sunday, or legal holiday, filing Form 8027 on the next day that is not a Saturday, Sunday, or
legal holiday will be considered timely.
SEC. 9. EXTENSIONS OF TIME TO FILE
.01 An extension of time to file may be requested for Forms 8027, 1099, 1098, 5498, W-2G, W-2, and 1042-S.
.02 Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC. This form may be
used to request an extension of time to file information returns submitted on paper, magnetically or electronically.
.03 Requesting an extension of time for multiple employers may be done by submitting Form 8809 and attaching a list of the em-
ployer names and their TINs (EIN or SSN). The listing must be attached to ensure the extension is recorded for all employers.
Form 8809 may be computer-generated or photocopied. Be sure that all the pertinent information is included.
1999–49 I.R.B.609December 6, 1999

.04 Requests for extensions of time for multiple employers will be responded to with one approval letter, accompanied by a list of
employers covered under that approval.
.05 As soon as it is apparentthat an extension of time to file is needed, Form 8809 may be submitted. When granted, the exten-
sion will be for 30 days. It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circum-
stances, a request for an extension of time could be denied. When a denial letter is received, any additional or necessary information
may be resubmitted within 20 days. When requesting an extension of time, do nothold your files waiting for a response.
.06 While very difficult to obtain, if an additional extension of time is needed, a second Form 8809 must be submitted before the
end of the initial extension period. Line 7 on the form should be checked to indicate that an additional extension is being requested.
A second 30-day extension will be approved only in cases of extreme hardship or catastrophic events.
.07 Form 8809 must bepostmarked no later than the due date of the return for which an extension is requested. If requesting an
extension of time to file several types of forms, use one Form 8809, but the Form 8809 must be postmarked no later than the earliest
due date. For example, if requesting an extension of time to file both Forms 8027 and 5498, submit Form 8809 postmarked on or be-
fore the last day of February.
.08 If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval let-
ter for extension of time should notbe sent to IRS/MCC with the magnetic/electronic file. When submitting Form 8027 on paper
onlyto the Andover Service Center, attach a copy of the approval letter. If an approval letter has not been received, send a copy of
the timely filed Form 8809.
.09 Request an extension for only one tax year.
.10 The extension request must be signed by the employer or a person who is duly authorized to sign a return, statement or other
document for the employer.
.11 Failure to properly complete and sign the Form 8809 may cause delays in processing the request or result in a denial. Care-
fully read and follow the instructions on the back of the Form 8809.
.12 Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).
Note: AN EXTENSION OF TIME TO FILE IS NOT AN EXTENSION TO ISSUE FORM W-2 COPY “A” TO THE
EMPLOYEE.
.13 Request an extension of time to furnish the statements to recipients of Forms W-2 by submitting a letter to IRS/MCC contain-
ing the following information:
(a) Employer name
(b) TIN
(c) Address
(d) Type of return (W-2)
(e) Specify that the extension request is to provide W-2 statements to recipients.
(f) Reason for delay
(g) Signature of employer or person duly authorized.
Requests for an extension of time to furnish the statements for Forms W-2 to recipients are not automatically approved; however, if
approved, generally an extension will allow a maximum of 30 additional days from the due date to furnish the statements to the re-
cipients. The request must be postmarked no later than the date on which the statements are due to the recipients.
SEC. 10. PROCESSING OF MAGNETIC/ELECTRONIC RETURNS
.01 All data received at IRS/MCC for processing will be given the same protection as individual returns (Form 1040). IRS/MCC
will process your magnetic/electronic files to ensure the records were formatted and coded according to this revenue procedure.
.02 If the data is formatted incorrectly, the file will be returned for replacement accompanied by a letter of explanation along with
a Media Tracking Slip (Form 9267). When media is returned, it is because IRS/MCC encountered errors (not limited to format) and
was unable to process the media; therefore, requiring a replacement. Open all packages immediately.
.03 Files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/MCC within 45 days from the date of
the letter IRS/MCC included with the returned media. A penalty for failure to file correct information returns by the due date will be
assessed if the file is not corrected and returned within the 45 days or if the incorrect file is returned by IRS/MCC for replace-
ment more than two times.A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not re-
ceived.
.04 Files will not be returned to you after successful processing. Therefore, if you want proof that IRS/MCC received your ship-
ment, you may use a carrier that provides proof of delivery.
.05 To distinguish between a correction and a replacement, the following definitions are provided:
(a) Acorrectionis a record submitted by the employer/transmitter to correct a record that was successfully processed by IRS,
but contained erroneous information.
December 6, 19996101999–49 I.R.B.

(b) Areplacementis a file that IRS has returned because of format errors or data discrepancies encountered during processing.
After necessary changes have been made, the file must be returned to IRS/MCC for processing.
SEC. 11. PENALTIES
.01 The Revenue Reconciliation Act of 1989 changed the penalty provisions for any documents, including corrections, which are
filed after the original filing date for the return. The penalty for failure to file correct information returns is “time sensitive,” in that
prompt correction of failures to file, or prompt correction of errors on returns that were filed, can lead to reduced penalties.
— The penalty generally is $50 for each information return that is not filed, or is not filed correctly, by the prescribed filing
date, with a maximum penalty of $250,000 per year ($100,000 for certain small businesses with average annual gross re-
ceipts, over the most recent 3-year period, not in excess of $5,000,000). The penalty generally is reduced to:
— $30 for each failure to comply if the failure is corrected more than 30 days after the return was due, but on or before August
1 of the calendar year in which the return was due, with a maximum penalty of $150,000 per year ($50,000 for certain small
businesses with average annual gross receipts, over the most recent 3-year period, not in excess of $5,000,000).
— $15 for each failure to comply if the failure is corrected within 30 days after the date the return was due, with a maximum
penalty of $75,000 per year ($25,000 for certain small businesses with average annual gross receipts, over the most recent
3-year period, not in excess of $5,000,000).
.02 Penalties can be waived if failures were due to reasonable cause and not to willful neglect. In addition, section 6721(c) of the
Code provides a de minimis rule that if:
(a) information returns have been filed but were filed with incomplete or incorrect information, and
(b) the failures are corrected on or before August 1 of the calendar year in which the returns were due, then the penalty for
filing incorrect returns (but not the penalty for filing late) will not apply to the greater of 10 returns or one-half of 1 percent
of the total number of information returns you are required to file for the calendar year.
.03 Intentional Disregard of Filing Requirements — If any failure to file a correct information return is due to intentional dis-
regard of the filing and correct information requirements, the penalty is at least $100 per information return with no maximum
penalty.
SEC. 12. CORRECTED RETURNS, SUBSTITUTE FORMS, AND COMPUTERGENERATED FORMS
.01 If returns must be corrected, approved magnetic/electronic filers must provide such corrections magnetically/electronically if
you have 250 or more. If your information is filed magnetically/electronically, corrected returns are identified by using the “Cor-
rected 8027 Indicator” in field position 370 of the employer record. Form 4804 must accompany the shipment, and the box for cor-
rection should be marked in Block 1 of the form. (See Part A, Sec. 10.05 for the definition of corrections.)
.02 If corrections are not submitted on magnetic media, employers must submit them on official Forms 8027. Substitute forms
that have been previously approved by IRS, or computergenerated forms that are exact facsimiles of the official form (except for
minor page size or print style deviations), may be submitted without obtaining IRS approval before using the form.
.03 Employers/establishments may send corrected paper Forms 8027 to IRS at the address shown in Part A, Sec. 13.01. Corrected
paper returns are identified by marking the “AMENDED” check box on Form 8027.
SEC. 13. EFFECT ON PAPER RETURNS
.01 If you are filing more than one paper Form 8027, you must attach a completed Form 8027T, Transmittal of Employer’s Annual
Information Return of Tip Income and Allocated Tips, to the Forms 8027 and send to:
Internal Revenue Service Center
Andover, MA 05501
IRS/MCC processes Forms 8027 submitted magnetically/electronically only. Do not send paper Forms 8027 to IRS/MCC.
.02 If part of a submission is filed magnetically/electronically and the rest of the submission is filed on paper Forms 8027, send
the paper forms to the Andover Service Center. For example, you filed your Forms 8027 magnetically/electronically with
IRS/MCC, and later you found that some of the forms you filed need correcting. Because of the low volume of corrections, you sub-
mit the corrections on paper Forms 8027. You must send these corrected Forms 8027 along with Form 8027-T to the Andover
Service Center.
1999–49 I.R.B.611December 6, 1999

SEC. 14. DEFINITIONS
ELEMENTDESCRIPTION
EINA nine-digit Employer Identification Number which has been assigned by IRS to the reporting entity.
Employer The organization supplying their information.
EstablishmentA large food or beverage establishment that provides food or beverage for consumption on the
premises; where tipping is a customary practice; and where there are normally more than 10 employ-
ees who work more than 80 hours on a typical business day during the preceding calendar year.
More than 10An employer is considered to have more than 10 employees on a typical business day during the
employeescalendar year if half the sum of: the average number of employee hours worked per business day in the
calendar month in which the aggregate gross receipts from food and beverage operations were great-
est, plusthe average number of employee hours worked per business day in the calendar month in
which the total aggregate gross receipts from food and beverage operations were the least, equals
more than 80 hours.
Employees hoursThe average number of employee hours worked per business day during a month is figured by
worked dividing the total hours worked during the month by all your employees who are employed in a food
or beverage operation by the average number of days in the month that each food or beverage opera-
tion at which these employees worked was open for business.
FileFor the purpose of this revenue procedure, a file consists of all magnetic/electronic records submitted
by an Employer or Transmitter.
TransmitterPerson or organization preparing magnetic/electronic file(s). May be Employer or agent of Employer.
TransmitterA five-character alpha/numeric code assigned by IRS to the transmitter prior to actual filing magneti-
Control cally/electronically. This number is inserted in the record and must be present. An application (Form
Code (TCC)4419) must be filed with IRS to receive this number.
ReplacementA replacement is an information return that IRS/MCC has returned to the transmitter due to errors en-
countered during processing.
CorrectionA correction is an information return submitted by the transmitter to correct an information return that
was previously submitted to and processed by IRS/MCC, but contained erroneous information.
PART B. MAGNETIC/ELECTRONIC SPECIFICATIONS
SEC. 1. GENERAL
.01 The magnetic/electronic specifications contained in this part of the revenue procedure define the required format and contents
of the records to be included in the file.
.02 A self-prepared media label must be affixed to each piece of media submitted for processing. Notice 210 provides instructions
on how to complete a self-prepared media label.
.03 The record format in Part B, Sec. 7, applies to both magnetic and electronic files.
SEC. 2. TAPE SPECIFICATIONS
.01 In most instances, IRS/MCC can process any compatible tape files. Compatible tape files must meet any one set of the fol-
lowing:
(a) 9-track EBCDIC (Extended Binary Coded Decimal Interchange Code) with;
(1) Odd Parity and
(2) A density of 1600 or 6250 BPI.
(3) If you use Unisys Series 1100, you must submit an interchange tape.
(b) 9-track ASCII (American Standard Coded Information Interchange) with;
(1) Odd Parity and
(2) A density of 1600 or 6250 BPI.
December 6, 19996121999–49 I.R.B.

Please be consistent in the use of recording codes and density on your files. If files are generated in more than one recording code
and/or density, multiple shipments would be appreciated.
.02 All compatible tape files must have the following characteristics:
(a)
1
⁄
2
inch mylar base, oxide coated; computer grade magnetic tape on reels up to 2400 feet (731.52 m) within the following
specifications:
(1) Tape thickness: 1.0 or 1.5 mils
(2) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm).
.03 All records have a fixed record length of 372 positions.
.04 The tape record defined in this revenue procedure may be blocked or unblocked, subject to the following:
(a) All records except the header and trailer labels may be blocked.
(b) If records are blocked, the block can not exceed 32,736 tape positions. The block length must be evenly divisible by 372
(c) If the use of blocked records would result in a short block, all remaining positions of the block MUST be filled with 9’s.
DO NOT PAD A BLOCK WITH BLANKS. Padding a block with blanks will result in a short record, which will cause
math computation errors. Your tape will then be returned for replacement.
.05 For the purposes of this revenue procedure, the following conventions must be used:
Header label:
(a) Transmitters may use standard headers provided they begin with 1HDR, HDR1, VOL1, or VOL2.
(b) Consists of a maximum of 80 positions.
(c) Header and trailer labels are optional unless more than one reel is being submitted. If more than one reel is being submitted,
header and trailer labels are required. IRS/MCC PREFERS STANDARD OR ANSI LABELED TAPES. IF YOU SUBMIT
AN UNLABELED TAPE, THIS MUST BE INDICATED ON THE EXTERNAL LABEL AND ON THE FORM 4804 OR
COMPUTERGENERATED SUBSTITUTE.
T
railer label:
(a) Standard trailer labels may be used provided that they begin with 1EOR, 1EOF, EOV1, or EOV2.
(b) Consists of a maximum of 80 positions.
(c) Header and trailer labels are optional unless more than one reel is being submitted. If more than one reel is being submit-
ted, header and trailer labels are required.
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) May follow the header label and precede and/or follow the trailer label.
SEC. 3. DISKETTE SPECIFICATIONS
IRS/MCC has discontinued processing 5
1
⁄
4
inch diskettes. Filers who use 5
1
⁄
4
inch diskettes must now use another method
of submitting information returns magnetically/electronically.
.01 To be compatible, a diskette file must meet the following specifications:
(a) 3
1
⁄
2
inches in diameter.
(b) Data must be recorded in standard ASCII code.
(c) Records must be fixed length of 372 bytes.
(d) Delimiter character commas (,) must not be used.
(e) Positions 371 and 372 of each record have been reserved for carriage return/line feed (cr/lf) characters.
(f) Filename of ATMTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,
the filename will contain a 3-digit extension. This extension will indicate the sequence of the diskette within the file. For
example, the first diskette will be named ATMTAX.001, the second diskette will be ATMTAX.002, etc.
(g) A file may contain more than one diskette as long as the filename conventions are adhered to.
(h) Diskettes must meet one of the following specifications:
CapacityTracksSides/DensitySector Size
1.44 mb96tpihd512
1.44 mb135tpihd512
1.2 mb96tpihd512
.02 IRS requires that 3
1
⁄
2
inch diskettes be created using MS/DOS. Diskettes created using other operating systems are not ac-
ceptable.
.03 Deviations from the prescribed format are not acceptable.
1999–49 I.R.B.613December 6, 1999

SEC. 4. TAPE CARTRIDGE SPECIFICATIONS
.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:
(a) Must be IBM 3480, 3490, 3490E, or AS400 compatible.
(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1) Tape cartridges must be
1
⁄
2
-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2) Magnetic tape must be chromium dioxide particle based
1
⁄
2
-inch tape.
(3) Cartridges must be 18-track or 36-track parallel (See Note).
(4) Cartridges must contain 37,871 CPI or 75,742 CPI (characters per inch).
(5) Mode must be full function.
(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must not exceed 32,736 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; how-
ever, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of log-
ical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item b above). The block length must be evenly divisible by 372.
(d) Records may not span blocks.
.03 Tape cartridges may be labeled or unlabeled.
.04 For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111 (8421).
(c) May follow the header label and precede and/or follow the trailer label.
Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 36-track or
8-track.
SEC. 5. 8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS
.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(a) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics.
(b) Created from an AS400 operating system only.
(c) 8mm (.315-inch) tape cartridges must be 2
1
⁄
2
-inch by 3
3
⁄
4
-inch.
(d) The 8mm tape cartridges must meet the following specifications:
TracksDensityCapacity
120 (43245 BPI)2.5 Gb
121 (45434 BPI)5 Gb
(e) Mode must be full function.
(f) Compressed data is not acceptable.
(g) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information In-
terchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on the exter-
nal media label affixed to the cartridge.
(h) A file may consist of more than one cartridge, however, no more than 250,000 documents may be transmitted per file or per
cartridge. The filename, for example; ATMTAX, will contain a three digit extension. The extension will indicate the se-
quence of the cartridge within the file 1 of 3, 2 of 3, and 3 of 3 and would appear in the header label ATMTAX.001, ATM-
TAX.002, and ATMTAX.003 on each cartridge of the file.
.02 The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must notexceed 32,736 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s; how-
ever, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
December 6, 19996141999–49 I.R.B.

(c) All records, except the header and trailer labels, may be blocked or unblocked. A record must not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of logical
records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be
shorter (see item (b) above). The block length must be evenly divisible by 372.
(d) Records must not span blocks.
(e) No more than 250,000 documents per cartridge and per file.
.03 Various COPY commands have been successful; however, the SAVE OBJECT COMMAND is not acceptable.
.04 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. ATMTAX may be used as a sug-
gested filename.
.05 For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111 (8421).
(c) May follow the header label and precede and/or follow the trailer label.
.06 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,
but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
.07 4mm (.157-inch) cassettes are now acceptable with the following specifications:
(a) 4mm cassettes must be 2
1
⁄
4
-inch by 3-inch.
(b) The tracks are 1 (one).
(c) The density is 19 (61000 BPI).
(d) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4 Gb.
(e) The general specifications for 8mm cartridges will also apply to the 4mm cassettes.
.08 Various Quarter Inch Cartridges (QIC) (
1
⁄
4
-inch) are also acceptable.
(a) QIC cartridges must be 40by 60.
(b) QIC cartridges must meet the following specifications:
SizeTracksDensityCapacity
QIC-248/95 (8000 BPI)45Mb or 60Mb
QIC-1201515 (10000 BPI)120Mb or 200Mb
QIC-1501816 (10000 BPI) 150Mb or 250Mb
QIC-5252617 (16000 BPI)525Mb
QIC-1000 3021 (36000 BPI)1Gb
QIC-2Gb4234 (40640 BPI) 2Gb
(c) The general specifications that apply to 8mm cartridges will also apply to QIC cartridges.
SEC. 6. ELECTRONIC FILING SPECIFICATIONS
01.IRS/MCC is in the process of updating all of its hardware and software for electronic filing. As a result, effective October 31,
1999, the Information Reporting Program Bulletin Board System (IRP-BBS) and 3780 bisynchronous electronic filing systems will
be discontinued. Starting November 1, 1999, users will be able to access the new electronic system via analog and ISDN BRI con-
nections. Bisynchronous electronic filing will no longer be supported. The new system is designed to support the electronic filing of
information returns only. The new telephone number for electronic filing is 1-304-262-2400. Publications and forms will no longer
be electronically available from MCC. Users needing the publications and forms that were formerly available on the IRP-BBS will
need to download them from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).
.02 Electronic filing of Forms 8027, originals’ replacements and corrections, is offered as an alternative to magnetic media (tape,
tape cartridge, or diskette) or paper filing, but is not a requirement. Transmitters filing electronically will fulfill the magnetic media
requirements for those payers who are required to file magnetically. It may also be used by payers who are under the filing threshold
requirement, but would prefer to file their information returns this way. If the original file was sent magnetically, but was returned
for replacement, the replacement may be transmitted electronically.
.03 The electronic filing of Forms 8027 is not affiliated with the Form 1040 electronic filing program. These two programs are
totally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the electronic
filing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the
filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll-free number (1-800-
829-1040)for assistance.
.04 Filers participating in the electronic filing program for Forms 8027 will submit their returns to IRS/MCC electronically and
not through magnetic media or paper filing. Files submitted in this manner must be in standard ASCII code.
1999–49 I.R.B.615December 6, 1999

.05 The format of the record is the same for electronically filed records as they are for 3
1
⁄
2
-inch diskettes, tapes, and tape car-
tridges and must be in standard ASCII code.
.06 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files elec-
tronically. (Filers who currently have a TCC for magnetic media filing do not have to request a second TCC for electronic filing.)
Refer to Part A, Sec. 6, for information on how to obtain a TCC.
.07 Once a TCC is obtained, electronic filers assign their own passwords and do not need prior or special approval.
.08 With all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.
Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive.However, if filers do forget
their password, call 304-263-8700for assistance.
Note: Passwords are case sensitive.
.09 Electronically filed Forms 8027 may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be
available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.
.10 Do not transmit data electronically from January 1 through January 5. This will allow time for IRS/MCC to update its system
to reflect current year changes.
.11 Data compression is encouraged when submitting Forms 8027 electronically. MCC has the ability to decompress files created
using several popular software compression programs such as ARC, COMPRESS, LHARC, and PKZIP. The time required to trans-
mit Forms 8027 electronically will vary depending on the modem speed and the type of data compression used, if any. The time re-
quired to transmit a file can be reduced by as much as 85 percent by using software compression and hardware compression.
The following are actual transmission rates for Forms 1099 achieved in test uploads at MCC using compressed files. The actual
transmission rates will vary depending on the modem speeds.
.12 Files submitted electronically will be assigned a unique filename by the FIRE system ( users may name the file anything they
choose from their end). The IRS assigned filename will consist of submission type [ORIG (original), CORR (correction), and REPL
(replacement)], the filer’s TCC, and a four digit number sequence. The sequence number will be incremented for every file sent.
For example, if it is your first original file for the calendar year and your TCC is 44444, the IRS assigned filename would be
ORIG.44444.0001. Record the filename. This information will be needed by MCC in order to identify the file if assistance is re-
quired and to complete Form 4804.
.13 Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in
duplicate filing. A new file should be sent consisting of the records that had not previously been submitted.
.14 The results of the electronic transmission will be available in the (F)ile Status area of the electronic system within 2 weeks;
however, no further processing will occur until the signed Form 4804 is received. The transmitter must mail or fax the signed Form
4804 the same day the electronic transmission is made. No return is considered filed until a Form 4804 is received by IRS/MCC.
.15 Form 4804 can be ordered by calling the IRS toll-free forms and publication order number 1-800-TAX-FORM, (1-800-829-
3676), or it may be computer-generated. It may also be obtained from the Internet at www.irs.gov.If a filer chooses to computer-
generate Form 4804, all of the information contained on the original form, including the affidavit, must also be contained on the
computer-generated form. This form is also contained in the back of this publication.
.16 Forms 4804 may be mailed to the following address:
If by Postal Service, air or truck freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Electronic Filing Coordinator
230 Murall Drive
Kearneysville, WV 25430
Please indicate on the envelope the following message:
CONTAINS FORM 4804 INFORMATION – NO MAGNETIC MEDIA
December 6, 19996161999–49 I.R.B.
Transmission Speed
in bps1000 Records10,000 Records100,000 Records
19.2K34 Sec.6 Min.60 Min.
56K20 Sec.3
1
⁄
2
Min.33 Min.
128K (ISDN)8 Sec.1 Min.10 Min.

.17 Contact the Electronic Filing System by dialing 304-262-2400. This number supports analog connections from 1200bps to
56Kbps or ISDN BRI 128Kbps connections. The system can be accessed via Dial-up network/web browser or a communications
software package such as Hyperterminal, Procomm, PCAnywhere, etc. The Dial-up network/web browser will provide an Internet-
like look without going through the Internet (point to point). If you do not have this capability, a text interface will be provided that
can be accessed via typical communications software and will perform similar to the former IRP-BBS.
.18 Due to the large number of communication products available, it is impossible to provide specific information on a particular
software package or hardware configuration. Filers should contact their software or hardware supplier for assistance. Your
browser will need to be capable of file uploads (i.e., Internet Explorer 4.0, Netscape Navigator 2.0 or higher). The following are
some general instructions (many of these settings may already be set by default in your software):
(a) Dial-up network settings:
(1) Set dial-up server type to PPP
(2) Set network protocol to TCP/IP
(3) Enable software compression
(4) Enable PPP LCP extensions
(b) Browser settings:
(1) Set to receive “cookies”
(2) Enable JavaScript or Jscript
(3) Browser must be capable of file uploads (i.e. Internet Explorer 4.0, Netscape 2.0 or higher)
(4) Enter the URL Address of http://10.225.224.2
(c) Communications software settings should be:
– No parity
– Eight data bits
– One stop bit
– Full duplex
(d) Hardware features
(1) Enable hardware flow control
(2) Enable modem error control
(3) Enable modem compression
.19 The first time you log on to the electronic system, you will need to create a new account. After completing the registration in-
formation, you will be prompted for a user name and password. Passwords are assigned by the user at first logon and are up to 8
alpha/numerics which are case sensitive. Remember your exactlogon name and password for future reference. If you forget your
logon name and/or password, call IRS/MCC at 304-263-8700 for assistance.
.20 Once you are an established user, select the logon option and then you will be prompted for your logon name and password.
Once you have entered this information, you will be at the Main Menu. Select one of the following options:
(a) Electronic Filing - this option will allow you to send your files and provide us with current mailing address information in
case we need to send any correspondence.
(b) File Status - this option will display the results of your file transfer and will be posted in this area.
Common Problems Associated with Electronic Filing
1. No Form 4804, Transmittal of Information Returns Reported Magnetically/Electronically.
Even though you have sent your Forms 8027 electronically, you still need to fax or mail the Form 4804. See Part B, Sec. 6.16 for the
mailing address. The fax number is 304-264-5602.
2. Transmitter does not dial back to the electronic system to determine file acceptability.
Within 2 weeks the results of your file transmission will be posted under the option called File Status. It is very important that you
check this option because if your file is bad we must receive a replacement within 45 days.
3. Transmitter compresses several files into one.
Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10
separate compressed files.
1999–49 I.R.B.617December 6, 1999

4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement or cor-
rection file to replace the original/correction/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad. If you do not want
us to process the file, you must first contact us at 304-263-8700 to see if this is a possibility.
5. Transmitter sends an original file that is good, then sends a correction file for the entire file even though there are only a few
changes.
The correction file, containing the proper coding, should only contain the records needing correction, not the entire file.
6. File format is formatted as EBCDIC.
File must be standard ASCII code. All files submitted electronically must be in standard ASCII Code.
SEC. 7. RECORD FORMAT AND LAYOUT
FORM 8027 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
1Establishment 1REQUIRED.This digit identifies the kind of establishment. Enter the number
Type which describes the type of establishment, as shown below:
1 for an establishment that serves evening meals only (with or without alcoholic
beverages).
2 for an establishment that serves evening meals and other meals (with or without
alcoholic beverages).
3 for an establishment that serves only meals other than evening meals (with or
without alcoholic beverages).
4 for an establishment that serves food, if at all, only as an incidental part of the
business of serving alcoholic beverages.
2–6 Establishment5REQUIRED.These five digit Serial Numbers are for identifying individual
Serial Numbers establishments of an employer reporting under the same EIN. The employer shall
assign each establishment a unique number. NUMERICS ONLY.
7–46Establishment40REQUIRED.Enter the name of the establishment. Left justify and fill unused
Namepositions with blanks. ALLOWABLE CHARACTERS ARE ALPHAS, NU-
MERICS, BLANKS, HYPHENS, AMPERSANDS, AND SLASHES.
47–86 Establishment40REQUIRED. Enter the mailing address of the establishment. Street address should
Street Addressinclude number, street, apartment or suite number (or P O Box if mail is not deliv-
ered to street address). Left justify and blank fill.
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,
Suite #300 must be entered as 210 N Queen St Suite 300.
87–111 Establishment 25REQUIRED. Enter the city, town, or post office. Left justify and blank fill.
City
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered
as St Louis.
December 6, 19996181999–49 I.R.B.

FORM 8027 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
112–113 Establishment 2REQUIRED.Enter state code of the establishment; must be one of the following:
State
STATE CODE STATECODE
Alabama ALMontana MT
Alaska AKNebraska NE
Arizona AZNevada NV
Arkansas ARNew HampshireNH
California CANew Jersey NJ
Colorado CONew Mexico NM
Connecticut CTNew York NY
Delaware DENorth Carolina NC
District of Columbia DCNorth Dakota ND
Florida FLOhio OH
Georgia GAOklahoma OK
Hawaii HIOregon OR
Idaho IDPennsylvania PA
Illinois ILRhode Island RI
Indiana INSouth Carolina SC
Iowa IASouth Dakota SD
Kansas KSTennessee TN
Kentucky KYTexas TX
Louisiana LAUtah UT
Maine MEVermont VT
Maryland MDVirginia VA
Massachusetts MAWashington WA
Michigan MIWest Virginia WV
Minnesota MNWisconsin WI
Mississippi MSWyoming WY
Missouri MO
114–122 Establishment 9REQUIRED.Enter the complete nine-digit ZIP Code of the establishment. If using
ZIP Codea five-digit ZIP Code, left justify the five-digit ZIP Code and fill the remaining four
positions with blanks.
Note: MUST BE NINE NUMERICS OR FIVE NUMERICS AND FOUR BLANKS. DO NOT ENTER THE DASH.
123–131 Employer9REQUIRED.Enter the nine-digit number assigned to the employer by IRS. DO
IdentificationNOT ENTER HYPHENS, ALPHAS, ALL 9’s, OR ALL ZEROS.
Number
132–171 Employer40REQUIRED. Enter the name of the employer as it appears on your tax forms (e.g.,
NameForm 941). Any extraneous information must be deleted. Left justify and blank fill.
ALLOWABLE CHARACTERS ARE ALPHAS, BLANKS, NUMERICS, AM-
PERSANDS, HYPHENS, AND SLASHES.
172–211 Employer 40REQUIRED.Enter mailing address of employer. Street address should include
Street Addressnumber, street, apartment or suite number (or P O Box if mail is not delivered to
street address). Left justify and blank fill.
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,
Suite #300 must be entered as 210 N Queen St Suite 300.
1999–49 I.R.B.619December 6, 1999

FORM 8027 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
212–236 Employer City 25REQUIRED. Enter the city, town, or post office. Left justify and blank fill.
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered
as St Louis.
237–238 Employer State 2REQUIRED.Enter state code of employer. Must be one of the abbreviations
shown in the state abbreviation table for Establishment State (field positions
112–113).
239–247Employer ZIP9REQUIRED.Enter the complete nine-digit ZIP Code of the employer. If using a
Codefive-digit ZIP Code, left justify the five-digit ZIP Code and fill the remaining four
positions with blanks.
Note: MUST BE NINE NUMERICS OR FIVE NUMERICS AND FOUR BLANKS. DO NOT ENTER THE DASH.
248–259 Charged Tips12REQUIRED.Enter the total amount of tips that are shown on charge receipts for
the calendar year. Amount must be entered in U.S. dollars and cents. The right most
two positions represent cents. Right justify and zero fill. If no entry, zero fill. NU-
MERICS ONLY. DO NOT ENTER DECIMAL POINTS, DOLLAR SIGNS,
OR COMMAS.
260–271Charged Receipts 12REQUIRED. Enter the total sales for the calendar year other than carry-out sales
or sales with an added service charge of 10 percent or more, that are on charge re-
ceipts with a charged tip shown. This includes credit card charges, other credit
arrangements, and charges to a hotel room unless the employer’s normal accounting
practice consistently excludes charges to a hotel room. Do not include any state or
local taxes in the amount reported. Amount must be entered in U.S. dollars and
cents. The right-most two positions represent cents. Right justify and zero fill. If no
entry, zero fill. NUMERICS ONLY. DO NOT INCLUDE DOLLAR SIGNS,
DECIMAL POINTS, OR COMMAS.
272–283Service Charge 12REQUIRED.Enter the total amount of service charges less than 10 percent added
Less Than 10to customer’s bills and were distributed to your employees for the calendar year. In
Percentgeneral, service charges added to the bill are year. In general, service charges added
to the bill are not tips since the customer does not have a choice. These service
charges are treated as wages and are included on Form W-2. For a more detailed ex-
planation, see Rev. Rul. 1928, 19691 C.B. 270. Amount must be entered in U.S.
dollars and cents. The right-most two positions represent cents. Right justify and
zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER DOLLAR
SIGNS, DECIMAL POINTS, OR COMMAS.
284–295 Indirect Tips 12REQUIRED.Enter the total amount of tips reported by indirectly tipped employ-
Reported ees (e.g., busboys, service bartenders, cooks) for the calendar year. Do not include
tips received by employees in December of the prior tax year but not reported until
January. Include tips received by employees in December of the tax year being re-
ported, but not reported until January of the subsequent year. Amount must be en-
tered in U.S. dollars and cents. The right-most two positions represent cents. Right
justify and zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER
DOLLAR SIGNS, DECIMAL POINTS, OR COMMAS.
December 6, 19996201999–49 I.R.B.

FORM 8027 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
296–307 Direct Tips 12REQUIRED.Enter the total amount of tips reported by directly tipped employees
Reported(e.g., waiters, waitresses, bartenders) for the calendar year. Do not include tips re-
ceived by employees in December of the prior tax year but not reported until Janu-
ary. Include tips received by employees in December of the tax year being reported,
but not reported until January of the subsequent year. Amount must be entered in
U.S. dollars and cents. The right-most two positions represent cents. Right justify
and zero fill. If no entry, zero fill. NUMERICS ONLY. DO NOT ENTER DOL-
LAR SIGNS, DECIMAL POINTS, OR COMMAS.
308–319 Total Tips 12REQUIRED. Enter the total amount of tips reported by all employees (both
Reportedindirectly tipped and directly tipped) for the calendar year. Do not include tips re-
ceived in December of the prior tax year but not reported until January. Include tips
received in December of the tax year being reported, but not reported until January
of the subsequent year. Amount must be entered in U.S. dollars and cents. The right-
most two positions represent cents. Right justify and zero fill. If no entry, zero fill.
NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL
POINTS, OR COMMAS.
320–331 Gross Receipts 12REQUIRED. Enter the total gross receipts from the provision of food and/or bev-
erages for this establishment for the calendar year. Do not include receipts for
carry-out sales or sales with an added service charge of 10 percent or more. Do not
include in gross receipts charged tips (field positions 248–259) shown on charge re-
ceipts unless you have reduced the cash sales amount because you have paid cash to
tipped employees for tips they earned that were charged. Do not include state or
local taxes in gross receipts. If you do not charge separately for food or beverages
along with other services (such as a package deal for food and lodging), make a
good faith estimate of the gross receipts attributable to the food or beverages. This
estimate must reflect the cost of providing the food or beverages plus a reasonable
profit factor. Include the retail value of complimentary food or beverages served to
customers if tipping for them is customary and they are provided in connection with
an activity engaged in for profit whose receipts would not be included as gross re-
ceipts from the provision of food or beverages (e.g., complimentary drinks served to
customers at a gambling casino). Amount must be entered in U.S. dollars and cents.
The right-most two positions represent cents. Right justify and zero fill. If no entry,
zero fill. NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL
POINTS, OR COMMAS.
332–343 Tip Percentage 12REQUIRED. Enter the amount determined by multiplying Gross Receipts for the
Rate Timesyear (field positions 320–331) by the Tip Percentage Rate (field positions 344–347).
For example, if the value of Gross Receipts is “000045678900” and Tip Percentage
Rate is “0800”, multiply $456,789.00 by .0800 to get $36,543.12 and enter
“000003654312”. If tips are allocated using other than the calendar year, enter
zeros; this may occur if you allocated tips based on the time period for which wages
were paid or allocated on a quarterly basis. Amount must be entered in U.S. dollars
and cents. The right-most two positions represent cents. Right justify and zero fill.
NUMERICS ONLY. DO NOT ENTER DOLLAR SIGNS, DECIMAL
POINTS, OR COMMAS.
344–347 Tip Percentage 4REQUIRED.Enter 8 percent (0800) unless a lower rate has been granted by the
RateDistrict Director. The determination letter must accompany the magnetic/electronic
submission. NUMERICS ONLY. DO NOT ENTER DECIMAL POINT.
1999–49 I.R.B.621December 6, 1999

FORM 8027 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
348–359 Allocated Tips 12REQUIRED.If Tip Percentage Rate times Gross Receipts (field positions
332–343) is greater than Total Tips Reported (field positions 308–319), then the dif-
ference becomes Allocated Tips. Otherwise, enter all zeros. If tips are allocated
using other than the calendar year, enter the amount of allocated tips from your
records. Amount must be entered in U.S. dollars and cents. The right-most two po-
sitions represent cents. Right justify and zero fill. NUMERICS ONLY. DO NOT
ENTER DOLLAR SIGNS, DECIMAL POINTS, OR COMMAS.
360Allocation 1REQUIRED.Enter the allocation method used if Allocated Tips (field positions
Method348–359) are greater than zero as follows:
1) for allocation based on hours worked.
2) for allocation based on gross receipts.
3) for allocation based on a good faith agreement.
The good faith agreement must accompany the magnetic/electronic submission. If
Allocated Tips are equal to zero, enter 0 (zero).
Note: Under Section 1571 of the Tax Reform Act of 1986, the method of allocation of tips based on the number of hours
worked as described in Section 31.6053–3(f)(1)(iv) may be utilized only by an employer that employs less than the equivalent
of 25 fulltime employees at the establishment during the payroll period. Section 31.6053–3(j)(19) provides that an employer
is considered to employ less than the equivalent of 25 fulltime employees at an establishment during a payroll period if the
average number of employee hours worked per business day during the payroll period is less than 200 hours.
361–364 Number of4REQUIRED.Enter the total number (must be greater than zero) of directly tipped
Directly Tippedemployees employed by the establishment for the calendar year. Right justify and
Employees zero fill. NUMERICS ONLY.
365–369 Transmitter 5REQUIRED. Enter the 5-digit Transmitter Control Code assigned by the IRS.
Control Code
(TCC)
370 Corrected 8027 1REQUIRED.Enter blank for original return. Enter “G” for corrected return. A
Indicatorcorrected return must be a complete new return replacing the original return.
371–372 Blank or cr/lf 2Magnetic/electronic filers are required to enter blanks. Diskette filers may enter
blanks or the carriage line feed characters (cr/lf).
FORM 8027 RECORD LAYOUT
12–67–4647–86
87–111112–113114–122123–131
December 6, 19996221999–49 I.R.B.
Establishment
Type
Establishment
Serial Number
Establishment
Name
Establishment
Street Address
Establishment
City
Establishment
State
Establishment
ZIP Code
Employer
Identification
Number

FORM 8027 RECORD LAYOUT
132–171172–211212–236237–238
239–247248–259260–271272–283
284–295296–307308–319320–331
332–343344–347348–359360
361–364365–369370371–372
SEC. 8. EFFECT ON OTHER DOCUMENTS
.01 Rev. Proc. 98–52 is superseded.
SEC. 9. EFFECTIVE DATE
.01 This revenue procedure is effective for Forms 8027 due the last day of February 2000 and any returns filed thereafter.
Employer Name
Employer Street
Address
Employer CityEmployer State
Employer Zip
Code
Charged TipsCharged Receipts
Service Charge
Less Than 10
Percent
Indirect Tips
Reported
Direct Tips
Reported
Total Tips
Reported
Gross Receipts
Tip Percentage
Rate Times Gross
Receipts
Tip Percentage
Rate
Allocated TipsAllocation Method
Number of Directly
Tipped Employees
Transmitter Control
Code (TCC)
Corrected 8027
Indicator
Blank or
cr/lf
1999–49 I.R.B.623December 6, 1999

26 CFR 601.602: Tax forms and instructions.
Publication 1245 (Rev. 10–99)
Specifications for Filing Form W-4, Employee’s Withholding Allowance Certificate, Magnetically or Electronically
Rev. Proc. 99–47
Reprinted from IR Bulletin l999–49
dated December 6, 1999
(Contains copies of Forms 4419, 6466, 6467, and notice 1027 for taxpayers’ use.)
Rev. Proc. 99–47
TABLE OF CONTENTS
PART A. GENERAL
SECTION 1.PURPOSE
SECTION 2.NATURE OF CHANGES
SECTION 3.WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER
SECTION 4.FILING REQUIREMENTS
SECTION 5.FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/ELECTRONI-
CALLY
SECTION 6.FILING DUE DATES
SECTION 7.FILING FORMS W-4 MAGNETICALLY/ELECTRONICALLY
SECTION 8.REPLACEMENT FILES
SECTION 9.EFFECT ON PAPER DOCUMENTS
SECTION 10. DEFINITION OF TERMS
PART B. MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS
SECTION 1.GENERAL
SECTION 2.TAPE SPECIFICATIONS
SECTION 3.3
1
⁄
2
-INCH DISKETTE SPECIFICATIONS
SECTION 4.TAPE CARTRIDGE SPECIFICATIONS
SECTION 58MM, 4MM and QUARTER INCH CARTRIDGE SPECIFICATIONS
SECTION 6. ELECTRONIC FILING SPECIFICATIONS
SECTION 7.FORM W-4 RECORD FORMAT AND RECORD LAYOUT
SECTION 8.EFFECT ON OTHER DOCUMENTS
SECTION 9.EFFECTIVE DATE
PART A. GENERAL
SEC. 1. PURPOSE
.01 The purpose of this revenue procedure is to update Rev. Proc. 98-26, March 30, 1998, (IRS Pub. 1245), which outlines the re-
quirements and conditions for submitting certain Forms W4, Employee’s Withholding Allowance Certificate, magnetically or elec-
tronically to the Internal Revenue Service (IRS), Martinsburg Computing Center (MCC).
.02 Revenue procedures are generally revised to reflect legislative and form changes. Comments concerning this revenue proce-
dure or suggestions for making it more helpful can be addressed to Internal Revenue Service, Martinsburg Computing Center,
ATTN: IRB Information Support Section, 230 Murall Dr, Kearneysville, WV 25430.
.03 The following revenue procedures and publications provide more detailed filing procedures for certain information returns
and can be obtained by contacting your local IRS office or by calling 1-800-829-3676:
(a) “Instructions for Forms 1099, 1098, 5498, and W-2G” provides specific instructions on completing and submitting infor-
mation returns to IRS.
(b) Rev. Proc. 84–33, 1984–1 C.B. 502, regarding the optional method for agents to report and deposit backup withholding.
(c) Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099 Series, 5498, and
W-2G.
December 6, 19996241999–49 I.R.B.

(d) Publication 1220, Specifications for Filing Form 1098, 1099, 5498, and W-2G Magnetically or Electronically.
(e) Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and
Allocated Tips, Magnetically or Electronically.
(f) Publication 1187, Specifications for Filing Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding,
Magnetically or Electronically
.04 Refer to Part A, Sec. 10, for definitions of terms used in this publication.
SEC. 2. NATURE OF CHANGES
In this publication, major changes have been emphasized by using italics. This has been done to assist filers in identifying new in-
formation. Filers are still advised to read the publication in its entirety.
The changes are as follows:
.01 EDITORIAL CHANGES
(a) Under Part A, Sec. 3, “WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CEN-
TER”, the address is now 230 Murall Dr, Kearneysville, WV 24530.
(b) The Information Reporting Program-Bulletin Board System (IRP-BBS) is no longer in use. The information in Part B, Sec.
6 Asynchronous (IRP-BBS) electronic filing specifications has been completely revised to provide instructions for the Fil-
ing Information Returns Electronically (FIRE) system.
(c) The new number for the electronic filing system is 304-262-2400.
(d) The following types of media are no longer acceptable by IRS/MCC:
(1) 5
1
⁄
4
inch diskettes;
(2) 3
1
⁄
2
inch diskettes created on a non-MS-DOS system;
(3) 3
1
⁄
2
inch diskettes created on a System 36 or AS400;
(e) The following QIC (quarter inch cartridge) sizes have been deleted from Part B, Sec. 5:
SizeTracksDensityCapacity
QIC-114/54(8000BPI)22Mb or 30Mb
QIC-3202617(16000 BPI)320Mb
QIC-13503018(51667 BPI)1.3Gb
.02 PROGRAMMING CHANGES
There are no programming changes for tax year 1999. Corrections to Rev. Proc. 98–26 printed in Internal Revenue Bulletin No.
1998–24, dated June 15, 1998, Announcement 98–48 have been incorporated into this revision.
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER
.01 All Forms W-4 filed magnetically or electronically are processed at IRS/MCC. Magnetic media containing Forms W-4 is to
be sent to the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Dr
Kearneysville WV 25430
.02 Requests for paper forms and publications can be made by calling the “Forms Only Number” listed in your local telephone di-
rectory or by calling the IRS toll-free number 1-800-TAX-FORM (1-800-829-3676).
.03 Questions pertaining to magnetic media/electronic filing of Forms W-2 must be directed to the Social Security Administration
(SSA). Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.
.04 A taxpayer or authorized representative may request a copy of a tax return or a Form W-2 filed with a return by submitting
Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM (1-800-
829-3676).
.05 The IRS/MCC Call Site, located in Kearneysville, WV, provides service to the payer/employer community (financial institu-
tions, employers, and other transmitters of information returns). The IRS/MCC Call Site answers questions concerning tax law and
the magnetic/electronic filing of questionable Forms W-4 as well as information returns (Forms 1096, 1098, 1099, 5498, 5498-MSA,
8027, W-2G, W-3, and 1042-S), inquiries dealing with backup withholding due to missing and incorrect taxpayer identification num-
bers and questions concerning paper filing of Forms W-2. Recipients of information returns (payees) should continue to contact
1-800-829-1040 or other numbers specified in the tax return instructions with any questions on how to report information returns.
1999–49 I.R.B.625December 6, 1999

The Call Site accepts calls from all areas of the country. The number to call is 304-263-8700or Telecommunications Device for
the Deaf (TDD) 304-267-3367. These are toll calls. The Call Site is in operation throughout the year to handle the questions of pay-
ers, transmitters, and employers. Due to the high demand for assistance at the end of January and February, it is advisable to call as
soon as possible to avoid these peak filing seasons.
.06 Telephone inquiries may be made Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern time. The telephone
numbers for magnetic media/electronic inquiries or electronic submissions are:
304-263-8700 – Call Site
304-262-2400 – Electronic Filing
304-267-3367 – TDD (Telecommunication Device for the Deaf)
304-264-5602 – Fax Machine
(These are not toll-free telephone numbers.)
TO OBTAIN FORMS & PUBLICATIONS CALL:
1-800-TAX-FORM (1-800-829-3676)
TO OBTAIN FORMS & PUBLICATIONS INTERNET:
www.irs.gov
SEC. 4. FILING REQUIREMENTS
.01 Employers are required to send to IRS quarterly, copies of all Forms W-4 received during the quarter from employees still em-
ployed at the end of the quarter who claim the following:
(a) More than 10 withholding allowances, or
(b) Exempt status and are expected to earn more than $200 a week.
.02 Employers are not required to send other Forms W-4 unless notified by IRS in writing to do so.
.03 Employers may submit all information magnetically or electronically; or a combination of magnetic/electronic files and paper
documents is acceptable, provided there are no duplications or omissions of documents. However, magnetic/electronic filing is pre-
ferred and strongly encouraged.
.04 A Form W-4 with a written statement attached from the employee must be filed on paper, not on magnetic media. If filing
paper Forms W-4, the employer may send them in each quarter with paper Forms 941. If the employer submits the paper Forms W-
4 at any time other than quarterly, a cover letter must be submitted giving the employer’s name, address, employer identification
number (EIN), and the number of Forms W-4 included.
NOTE: MCC DOES NOT PROCESS PAPER RETURNS. PAPER RETURNS MUST BE FILED WITH THE APPROPRI-
ATE SERVICE CENTER. SEE FORM 941 INSTRUCTIONS FOR THE APPROPRIATE SERVICE CENTER.
SEC. 5. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS MAGNETICALLY/
ELECTRONICALLY
.01 Employers, or their transmitters, who wish to file magnetically or electronically, must submit a Form 4419, Application for
Filing Information Returns Magnetically/Electronically. Instructions for its completion are on the reverse of the form.
.02 Magnetic/electronic files may not be filed with IRS/MCC until authorization to file is received. Requests will be approved or
disapproved within 30 days of receipt.
.03 Only applications of employers or transmitters whose equipment meets the specifications in Part B, Sec. 2, 3, 4, 5 or 6 will be
approved.
.04 Once authorization to file has been granted, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned.
Approval will continue in effect in succeeding years provided the requirements of the current revenue procedure are met and there
are no equipment changes by the employer or transmitter. Although a TCC may have already been assigned to a transmitter for the
filing of information returns, the Form W-4 requires a separate TCC of its own. This TCC must appear on all transmittal forms sub-
mitted with magnetic/electronic files, as well as other correspondence. The TCC must also be coded into positions 319-323 of the
Form W-4 record. (See Part B, Sec. 7.)
.05 New applications (Forms 4419) are required whenever
(a) You discontinue filing magnetically/electronically for two years, in which case your TCC may have been reassigned. You
may call IRS/MCC to verify if your TCC is still valid.
(b) You have used a service agency in the past, and they had their own TCC, to prepare your files but you now have computer
equipment compatible with that of IRS, in which case you must request your own TCC.
December 6, 19996261999–49 I.R.B.

SEC. 6. FILING DUE DATES
.01 Magnetic/electronic reporting of Forms W-4 to IRS must be at least quarterly (monthly reporting is encouraged). The follow-
ing are the quarter end dates:
Period Covered Due Date
January 1 thru March 31 April 30
April 1 thru June 30 July 31
July 1 thru September 30 October 31
October 1 thru December 31 January 31
.02 If any due date falls on a Saturday, Sunday, or legal holiday, the Forms W-4 are considered timely if they are filed on the next
day that is not a Saturday, Sunday, or legal holiday.
SEC. 7. FILING FORMS W-4 MAGNETICALLY/ELECTRONICALLY
.01 A Magnetic Media/Electronic Reporting Package which includes the current revenue procedure and the necessary transmittal
forms will be mailed to approved filers each year.
.02 If the employer chooses to file magnetically/electronically, then a Form 6466, Transmittal of Forms W-4 Reported Magneti-
cally/Electronically, must be sent to the IRS/MCC as prescribed in Part A, Sec. 3.
.03 Form 6466 MUST be signed by the employer or the transmitter, service bureau, paying agent, or disbursing agent (all here-
after referred to as agent), on behalf of the employer if the agent has the authority to sign the affidavit under an agency agreement
(either oral, written, or implied) that is valid under state law and adds the caption “FOR: (name of employer).”
.04 Although a duly authorized agent signs the affidavit, the employer(s) is held responsible for the accuracy of the Forms W-4
filed magnetically or electronically.
.05 DO NOT REPORT THE SAME INFORMATION ON PAPER DOCUMENTS THAT YOU REPORT MAGNETI-
CALLY/ELECTRONICALLY.If you report part of your returns on paper and part magnetically or electronically, be sure that du-
plicate returns are not included on both.
.06 Before submitting your magnetic/electronic file, include the following:
(a) A signed Form 6466, Transmittal of Forms W-4 Reported Magnetically/Electronically along with a Form 6467, Transmittal
of Forms W-4 Reported Magnetically/Electronically(Continuation), if you submit data for multiple employers. These
forms must be mailed or faxed the same day electronic files are submitted.
(b) Your media (tape, diskette, or cartridge) with an external identifying label. Notice 1027 describes the information which
should be included on this self-prepared label.
(c) On the outside of the shipping container, affix the label IRB Special Projects. This label is included in the publication.
.07 IRS/MCC will not return filers’ magnetic media after it has been successfully processed. Should filers wish to know if their
media was received by IRS/MCC, a delivery service that provides certification of delivery is recommended.
.08 IRS cannot accept any Cash-On-Delivery (COD) or Charged-to-IRS shipments of reportable tax information that an individ-
ual or organization is legally required to file. Because of the high volume of data received and shipping cost involved, special ship-
ping containers will not be returned.
.09 Use this record format and processing capabilities to file Forms W-4 submitted for the quarter ending March 31, 2000 and for
all subsequent filings.
SEC. 8. REPLACEMENT FILES
THE MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS CONTAINED IN PART B OF THIS REVENUE PRO-
CEDURE MUST BE STRICTLY ADHERED TO.If files are not processable, they will be returned to you for replacement and
resubmission, or submission of paper Forms W-4. Replacement files must be resubmitted to IRS/MCC within 45 days of the date of
the enclosed letter. The media should be identified as replacement data by writing, typing or printing “Magnetic Media Replace-
ment” on the external label used on the magnetic media and marking the replacement box on the Form 6466. If filing electronically,
you should choose replacement when asked for the type of submission to identify a replacement file before transmission begins.
SEC. 9. EFFECT ON PAPER DOCUMENTS
.01 Magnetic/electronic reporting to IRS eliminates the need to submit copies of paper Forms W-4.
.02 If part of the Forms W-4 are reported magnetically/electronically and the remainder are reported on paper forms, the paper
Forms W-4 must be mailed to the appropriate service center.
1999–49 I.R.B.627December 6, 1999

SEC. 10. DEFINITION OF TERMS
EmployerGenerally, an employer is a person or organization for whom a worker performs a service as an employee.
The employer has the right to direct and control the worker. A person or organization paying wages to a
former employee after the work ends is also considered an employer.
EmployeeOne who performs services for an employer.
EIN Employer Identification Number that has been assigned by IRS.
File For purposes of this procedure, a file consists of all magnetic/electronic records submitted by an em-
ployer or transmitter.
Special Character Any character that is not a numeric, an alpha or a blank.
TaxpayerMay be either an Employer Identification Number (EIN); a Social Security Number (SSN); an IRS
Identification Individual Taxpayer Identification Number (ITIN) issued to an alien individual; or an IRS Adoption
Number (TIN)Taxpayer Identification Number(ATIN) assigned to children who are in the process of being adopted.
TransmitterPerson or organization preparing and/or submitting magnetic/electronic file(s).
Transmitter A five-character alpha/numeric number assigned by IRS to the transmitter prior to actual filing magneti-
Control Code cally/electronically. This number is inserted in Positions 319–323 of your files and must be present before
(TCC) the file can be processed. An application Form 4419 must be filed with IRS to receive this number.
PART B. MAGNETIC MEDIA/ELECTRONIC SPECIFICATIONS
SEC. 1. GENERAL
.01 The specifications contained in this part of the revenue procedure define the required format and content of the records to be
included in the magnetic/electronic file. Use this revenue procedure to file Forms W-4 submitted for the quarter ending March 31,
2000 and all subsequent filings.
.02 An external label must appear on each tape, tape cartridge and diskette submitted. Notice 1027 details what information must
be on the label. The diskettes used must be MS/DOS compatible.
SEC. 2. TAPE SPECIFICATIONS
.01 IRS/MCC can process most magnetic tape files if the following specifications are followed:
(a) 9-track EBCDIC (Extended Binary Coded Decimal Interchange Code) with
(1) Odd parity
(2) Recording density—1600 or 6250 BPI
(3) If you use UNISYS Series 1100, you must submit an interchange tape.
(b) 9-track ASCII (American Standard Coded Information Interchange) with:
(1) Odd parity
(2) Recording density—1600 or 6250 BPI
.02 All tape files must have the following characteristics:
(a) 0.5 inch (12.7 mm) wide computer grade magnetic tape,
(b) Tape thickness: 1.0 or 1.5 mils,
(c) Reel diameter: 10.5 inch (26.67 cm), 8.5 inch (21.59 cm), or 7 inch (17.78 cm) and
(d) Reel of tape up to 2400 feet (731.52 m).
.03 All records, including Header and Trailer Labels (if used) must be transmitted using the same density.
.04 The tape records defined in this revenue procedure may be blocked subject to the following:
(a) A block must not exceed 32,550 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s; how-
ever, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of log-
December 6, 19996281999–49 I.R.B.

ical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item (b) above). The block length must be evenly divisible by 350.
(d) All data records are a fixed record length of 350 positions and may not span blocks.
.05 Labeled or unlabeled tapes may be submitted.
.06 For the purposes of this revenue procedure the following must be used:
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111(8421).
(c) May follow the header label and precede and/or follow the trailer label.
.07 Do not submit an employee Form W-4 record without the required employer identification information. Every record must
contain both employee and employer data.
SEC. 3. 3
1
⁄
2
-INCH DISKETTE SPECIFICATIONS
.01 To be compatible, a diskette file must meet the following specifications:
(a) 3
1
⁄
2
-inches in diameter.
(b) Data must be recorded in standard ASCII code.
(c) Records must be a fixed length of 350 bytes per record.
(d) Delimiter character commas (,) must not be used.
(e) Positions 349 and 350 of each record have been reserved for carriage return/line feed (cr/lf) characters.
(f) Filename of QWFTAX must be used. Do not enter any other data in this field. The extension will indicate the sequence of
the diskettes within the file. For example, the first diskette will be named QWFTAX.001, the second diskette will be
QWFTAX.002, etc.
(g) A diskette file may consist of multiple diskettes as long as the file naming conventions are adhered to.
(h) Diskettes must meet one of the following specifications:
CapacityTracksSides/Density Sector Size
1.44 mb96tpihd512
1.44 mb135tpihd512
1.2 mb96tpihd512
.02 3
1
⁄
2
-inch diskettes are only acceptable if they were created using MS/DOS.
SEC. 4. TAPE CARTRIDGE SPECIFICATIONS
.01 In most instances, IRS/MCC can process tape cartridges that meet the following specifications:
(a) Must be IBM 3480, 3490, 3490E, or AS400 compatible.
(b) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1) Tape cartridges will be
1
⁄
2
-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2) Magnetic tape will be chromium dioxide particle based
1
⁄
2
-inch tape.
(3) Cartridges must be 18-track or 36-track parallel (See Note).
(4) Cartridges will contain 37,871 CPI (characters per inch ) or 75,742 CPI.
(5) Mode will be full function.
(6) The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must notexceed 32,550 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s; how-
ever, the last block of the file may be filled with 9s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields which describe the length of the block or the logical records within the block. The number of log-
ical records within a block (the blocking factor) must be constant in every block with the exception of the last block which
may be shorter (see item (b) above). The block length must be evenly divisible by 350.
(d) Records may not span blocks.
.03 Tape cartridges may be labeled or unlabeled.
.04 For the purposes of this revenue procedure, the following must be used:
1999–49 I.R.B.629December 6, 1999

Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111(8421).
(c) May follow the header label and precede and/or follow the trailer label.
Note: Filers should indicate on the external media label and transmittal Form 6466 whether the cartridge is 36-track or
18-track.
SEC. 5. 8MM, 4MM, AND QUARTER INCH CARTRIDGE SPECIFICATIONS
.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(a) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1) Created from an AS400 operating system only.
(2) 8mm (.315-inch) tape cartridges will be 2
1
⁄
2
-inch by 3
3
⁄
4
-inch.
(3) The 8mm tape cartridges must meet the following specifications:
TracksDensityCapacity
120 (43245 BPI)2.3 Gb
121 (45434 BPI)5 Gb
(4) Mode will be full function.
(5) Compressed data is not acceptable.
(6) Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information In-
terchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on the exter-
nal media label affixed to the cartridge.
.02 The 8mm (.315-inch) tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(a) A block must notexceed 32,550 tape positions.
(b) If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9’s;
however, the last block of the file may be filled with 9’s or truncated. Do not pad a block with blanks.
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control
fields or block descriptor fields which describe the length of the block or the logical records within the block. The num-
ber of logical records within a block (the blocking factor) must be constant in every block with the exception of the last
block which may be shorter (see item (b) above). The block length must be evenly divisible by 350.
(d) Various COPY commands have been successful, however, the SAVE OBJECT COMMAND is not acceptable.
(e) Records may not span blocks.
.03 For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. QWFTAX may be used as a sug-
gested filename.
.04 For the purposes of this revenue procedure, the following must be used:
Tape Mark:
(a) Used to signify the physical end of the recording on tape.
(b) For even parity, use BCD configuration 001111(8421).
(c) May follow the header label and precede and/or follow the trailer label.
.05 IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tapemark,
but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
.06 4mm (.157-inch) cassettes are acceptable with the following specifications:
(a) 4mm cassettes will be 2
1
⁄
4
-inch by 3-inch.
(b) The tracks are 1 (one).
(c) The density is 19 (61000 BPI).
(d) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4Gb.
(e) The general specifications for 8mm cartridges will also apply to the 4mm cassettes.
.07 Various Quarter Inch Cartridges (QIC) (
1
⁄
4
-inch) are also acceptable.
(a) QIC cartridges will be 40by 60.
(b) QIC cartridges must meet the following specifications:
December 6, 19996301999–49 I.R.B.

SizeTracksDensityCapacity
QIC-248/95 (8000 BPI)45Mb or 60Mb
QIC-1201515 (10000 BPI) 120Mb or 200Mb
QIC-1501816 (10000 BPI)150Mb or 250Mb
QIC-5252617 (16000 BPI)525Mb
QIC-10003021 (36000 BPI)1Gb
QIC-2Gb4234 (40640 BPI) 2Gb
SEC. 6. ELECTRONIC FILING SPECIFICATIONS
01. IRS/MCC is in the process of updating all of its hardware and software for electronic filing. Effective October 31, 1999, the
Information Reporting Program Bulletin Board System (IRP-BBS) electronic filing system will be discontinued. Starting November
1, 1999, users will be able to access the new electronic system via analog and ISDN BRI connections. The new system is designed to
support the electronic filing of information returns only. The new telephone number for electronic filing is (1-304-262-2400).Pub-
lications and forms will no longer be electronically available from MCC. Users needing the publications and forms that were for-
merly available on the IRP-BBS will need to download them from the IRS website at www.irs.gov or by calling 1-800-TAX-FORM
(1-800-829-3676).
.02 Electronic filing of Form W-4 originals and replacements is offered as an alternative to magnetic
media (tape, tape cartridge, or diskette) or paper filing, but is not a requirement.If the original file was sent magnetically, but was
returned for replacement, the replacement may be transmitted electronically.
.03 The electronic filing of Forms W-4 is not affiliated with the Form 1040 electronic filing program. These two programs are to-
tally independent, and filers must obtain separate approval to participate in each of them. All inquiries concerning the electronic fil-
ing of information returns should be directed to IRS/MCC. IRS/MCC personnel cannot answer questions or assist taxpayers in the
filing of Form 1040 tax returns. Filers with questions of this nature will be directed to the Customer Service toll-free number (1-800-
829-1040) for assistance.
.04 Filers participating in the electronic filing program for Forms W-4 will submit their returns to IRS/MCC electronically and not
through magnetic media or paper filing. Files submitted in this manner must be in standard ASCII code.
.05 The format of the record is the same for electronically filed records as they are for 3
1
⁄
2
-inch diskettes, tapes, and tape
cartridges and must be in standard ASCII code.
.06 Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned to them prior to submitting their files elec-
tronically. (Filers who currently have a TCC for magnetic media filing of Forms W-4 do not have to request a second TCC for elec-
tronic filing.) Refer to Part A, Sec. 5, for information on how to obtain a TCC.
.07 Once a TCC is obtained, electronic filers assign their own passwords and do not need prior or special approval.
.08 With all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.
Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive. However, if filers do forget their
password, call 304-263-8700for assistance.
Note: Passwords are case sensitive.
.09 Electronically filed Forms W-4 may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be
available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern Time by calling 304-263-8700.
.10 Do not transmit data electronically from January 1 through January 5. This will allow time for IRS/MCC to update their
system to reflect current year changes.
.11 Data compression is encouraged when submitting Forms W-4 electronically. MCC has the ability to decompress files created
using several popular software compression programs such as ARC, COMPRESS, LHARC, and PKZIP. The time required to trans-
mit Forms W-4 electronically will vary depending on the modem speed and the type of data compression used, if any. The time re-
quired to transmit a file can be reduced by as much as 85 percent by using software compression and hardware compression.
The following are actual transmission rates achieved in test uploads of 1099 information at MCC using compressed files. The actual
transmission rates will vary depending on the modem speeds.
1999–49 I.R.B.631December 6, 1999
Transmission Speed
in bps1000 Records10,000 Records100,000 Records
19.2K34 Sec.6 Min.60 Min.
56K20 Sec.3
1
⁄
2
Min.33 Min.
128K (ISDN)8 Sec.1 Min.10 Min.

.11 Files submitted electronically will be assigned a unique filename by the IRS system (the user can name the file anything they
choose from their end). The IRS assigned filename will consist of the filers TCC, the submission type [ORIG (original), and REPL
(replacement)], and a four digit number sequence. The sequence number will be incremented for every file sent. For example, if it
is your first original file for the calendar year and your TCC is 44444, the IRS assigned filename would be ORIG.44444.0001.
Record the filename. This information will be needed by MCC in order to identify the file, if assistance is required, and to complete
Form 6466.
.12Filers are advised not to resubmit an entire file if records were omitted from the original transmission. This will result in
duplicate filing. A new file should be sent consisting of the records that had not previously been submitted.
.13 The results of the electronic transmission will be available in the File Status area of the electronic system within two weeks;
however, no further processing will occur until the signed Form 6466 is received. The transmitter must mail or fax the signed Form
6466 the same day the electronic transmission is made. No return is considered filed until a Form 6466 is received by IRS/MCC.
.14 Form 6466 can be ordered by calling the IRS toll-free forms and publications order number 1-800-TAX-FORM, (1-800-829-
3676), or it may be computer-generated. It may also be obtained from the Internet at www.irs.gov. If a filer chooses to computer-
generate Form 6466, all of the information contained on the original form, including the affidavit, must also be contained on the
computer-generated form.
.15 Forms 6466 may be mailed to the following address:
If by Postal Service, air or truck freight:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Electronic Filing Coordinator
230 Murall Drive
Kearneysville, WV 25430
Please indicate on the envelope the following message:
CONTAINS FORM 6466 INFORMATION - NO MAGNETIC MEDIA
.16 Contact the Electronic Filing System by dialing 304-262-2400. This number supports analog connections from 1200bps to
56Kbps or ISDN BRI 128Kbps connections. The system can be accessed via Dial-up network/web browser or a communications
software package such as Hyperterminal, Procomm, PCAnywhere, etc. The Dial-up network/web browser will provide an Internet-
like look without going through the Internet (point to point). If you do not have this capability, a text interface will be provided that
can be accessed via typical communications software and will perform similar to the former IRP-BBS.
.17 Due to the large number of communication products available, it is impossible to provide specific information on a particular
software package or hardware configuration. Filers should contact their software or hardware supplier for assistance. Your
browser will need to be capable of file uploads (i.e., Internet Explorer 4.0, Netscape Navigator 2.0 or higher). The following are
some general instructions (many of these settings may already be set by default in your software):
(a) Dial-up network settings:
(1) Set dial-up server type to PPP
(2) Set network protocol to TCP/IP
(3) Enable software compression
(4) Enable PPP LCP extensions
(b) Browser settings:
(1) Set to receive “cookies”
(2) Enable JavaScript or Jscript
(3) Browser must be capable of file uploads (i.e. Internet Explorer 4.0, Netscape 2.0 or higher)
(4) Enter the URL Address of http://10.225.224.2
(c) Communications software settings should be:
– No parity
– Eight data bits
– One stop bit
– Full duplex
(d) Hardware features
(1) Enable hardware flow control
(2) Enable modem error control
(3) Enable modem compression
.18 The first time you log on to the electronic system, you will need to create a new account. After completing the registration in-
formation, you will be prompted for a user name and password. Passwords are assigned by the user at first logon and are up to 8
alpha/numerics which are case sensitive. Remember your exactlogon name and password for future reference. If you forget your
logon name and/or password, call IRS/MCC at 304-263-8700 for assistance.
December 6, 19996321999–49 I.R.B.

.19 Once you are an established user, select the logon option and then you will be prompted for your logon name and password.
Once you have entered this information, you will be at the Main Menu. Select one of the following options:
(a) Electronic Filing - this option will allow you to send your files and provide us with current mailing address information in
case we need to send any correspondence.
(b) File Status - this option will display the results of your file transfer and will be posted in this area within 2 weeks.
Common Problems Associated with Electronic Filing
1. No Form 6466, Transmittal of Forms W-4 Reported Magnetically/Electronically.
Even though you have sent your Forms W-4 electronically, you still need to fax or mail the Form 6466. See Part B, Sec. 6.15 for the
mailing address. The fax number is 304-264-5602.
2. Transmitter does not dial back to the electronic system to determine file acceptability.
Within 2 weeks the results of your file transmission will be posted under the option called File Status. It is very important that you
check this option because if your file is bad we must receive a replacement within 45 days.
3. Transmitter compresses several files into one.
Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10
separate compressed files.
4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement file to
replace the original/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad. If you do not want
us to process the file, you must first contact us at 304-263-8700 to see if this is a possibility.
5. File format is formatted as EBCDIC.
All files submitted electronically must be in standard ASCII Code.
SEC. 7. FORM W-4 RECORD FORMAT AND RECORD LAYOUT
.01 This record is used to identify the employer, the employee, number of allowances, and other information that is reported on
the paper Form W-4.
.02 ALL RECORDS MUST BE A FIXED LENGTH OF 350 POSITIONS.
.03 Do not begin any record at the end of a block or diskette and continue the same record into the next block or diskette.
FORM W-4 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
1–9 Employee Tax9REQUIRED. Enter the 9-digit TIN assigned to the employee. DO NOT ENTER
IdentificationHYPHENS or ALPHA CHARACTERS. All zeroes, ones, twos, etc. will have the
Number (TIN)effect of an incorrect TIN.
10–44 Employee Name 35REQUIRED. Enter the name of the employee whose TIN appears in field positions
Line 11-9. Enter the name in the following order: first name, middle name (if present),
and surname. (Use initials for the first and middle names where necessary to insure
that the entire employee surname fits in the field.) If fewer than 35 characters are
used, left-justify and fill unused positions with blanks.
1999–49 I.R.B.633December 6, 1999

(1) A blank must be surrounded by alphas or continued to the end of the field
(e.g., ab...b, aba).
(2) A hyphen in the first position is to identify an employee with surname only.
Hyphens must be surrounded by alphas or numerics and must never occur in the
first position of a name unless immediately followed by a caret.
(3) A caret is used to define an internal name control. It must immediately pre-
cede the employee surname in place of the blank. A second caret is used to sepa-
rate a suffix from the surname (e.g., JOHN J. <BLACK; BILL<OAK<JR; AMY
FERN<BROWN<MD).
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. A minimum of one and
a maximum of two carets (<) can be used. Punctuation, such as, periods and commas are not allowed and will cause your file
to be returned.
45–79 Employee Name35Optional. This line is designated for an “in care of” (c/o) situation. Left-justify and
Line 2fill unused positions with blanks. Hyphens and slashes must be surrounded by al-
phas or numerics; ampersands must be surrounded by blanks; blanks must be sur-
rounded by alphas or numerics or continued to the end of the field (e.g., ab...b,
aba).
Note: The same exceptions apply as set forth in “Employee Name Line 1”; also the use of a percent sign (%) is not valid—
use c/o if necessary.
80–114 Employee Street35REQUIRED. Enter mailing address of employee. Street address should include
Addressnumber, street, apartment or suite number (or P O Box if mail is not delivered to
street address). Left-justify and fill unused positions with blanks. Position 80 must
be an alpha or numeric; hyphens and slashes must be surrounded by alphas or nu-
merics; ampersands must be surrounded by blanks; blanks must be surrounded by
alphas or numerics or continued to the end of the field (e.g., ab...b, aba).
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,
Suite #300 must be entered as 210 N Queen St Suite 300.
115–139 Employee City25REQUIRED.Enter the city, town or post office. If a foreign address, see Note 2.
Leftjustify and fill unused positions with blanks. Enter APO or FPO, if applicable.
Do not enter state and ZIP Code information in this field. Position 115 must be an
alpha or numeric; hyphens must be surrounded by alphas or numerics; blanks must
be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b,
aba).
Note 1: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered
as St Louis.
Note 2: For foreign addresses, you may use the 25 position Employee City field to provide the following information: city
and country name.
140–141 Employee State 2REQUIRED.Enter the two character location code of employee address; must be
one of the following:
Note: For foreign addresses, enter XX from table below.
Location Code Location CodeLocationCode
Alabama ALKentucky KYOhio OH
Alaska AK Louisiana LAOklahoma OK
American Samoa AS Maine ME Oregon OR
Arizona AZMarshall Islands MH Pennsylvania PA
Arkansas AR Maryland MD Puerto Rico PR
California CAMassachusetts MARhode Island RI
Colorado CO Michigan MI South Carolina SC
December 6, 19996341999–49 I.R.B.

FORM W-4 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
Location Code Location CodeLocationCode
Connecticut CTMinnesota MN South Dakota SD
Delaware DE Mississippi MS TennesseeTN
District of Columbia DC Missouri MO Texas TX
Federated States Montana MTUtah UT
of Micronesia FM Nebraska NE Vermont VT
Florida FLNevada NVVirginia VA
Georgia GANew Hampshire NH Virgin Islands VI
Guam GU New Jersey NJ WashingtonWA
Hawaii HI New Mexico NM West Virginia WV
Idaho ID New York NYWisconsinWI
Illinois ILNorth Carolina NC Wyoming WY
Indiana IN North Dakota ND Foreign Address,
Iowa IANorthern All OthersXX
Kansas KS Mariana Islands MP
142–150 Employee 9 REQUIRED. Enter the valid nine-digit ZIP Code of employee. IF YOU ONLY
ZIP CodeHAVE FIVE (5) DIGITS AVAILABLE, LEFT-JUSTIFY AND ZERO FILL.
Blank fill only if the employee’s ZIP Code is unavailable.
151 Marital Status 1 REQUIRED.Enter appropriate code from the table below:
Marital StatusCode
Designated
Single S
Married M
Married, withhold
at single rate W
No marital status
designated A
152 Exempt Status1 REQUIRED.Enter “E” if employee claims exempt status; otherwise, enter
blank.
153 BLANK1Enter Blank.
154–156 Allowances3REQUIRED.Must be a three (3) digit numeric field corresponding to the
number of allowances claimed by employee. (It is necessary to file this Form W-4
with IRS if the number of allowances is more than ten (10) or exempt status is
claimed.) Field must be right justified and zero filled. If no entry, or employee
claimed exempt status, enter blanks.
157–163 Additional Amount7REQUIRED.Enter any additional amount of withholding the employee wants de-
ducted from each pay. Amount must be entered in U.S. dollars and cents. The right-
most two positions represent cents. Do not enter dollar signs, commas, decimal
points, or negative numbers. Right-justify and zero fill. If no entry, zero fill.
164–169 BLANK6Enter Blanks.
1999–49 I.R.B.635December 6, 1999

FORM W-4 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
170–178 Employer9 REQUIRED.The 9-digit EIN assigned to the employer. DO NOT ENTER
IdentificationHYPHENS, ALPHA CHARACTERS. All zeroes, ones, twos, etc. will have the
Numbereffect of an incorrect TIN.
179–213 Employer Name35 REQUIRED.Enter the name of the employer as it appears on employment tax
Line 1 forms (e.g., Form 941). Any extraneous information must be deleted from this name
line. Left-justify and fill with blanks. Position 179 must be alpha or numeric; hy-
phens and slashes must be surrounded by alphas or numerics; blanks must be sur-
rounded by alphas or numerics or continued to the end of the field (e.g., ab...b, aba).
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation, such as
periods and commas, are not allowed and will cause your file to be returned.
214–247 Employer Name 34If the employer name requires more space than is available in Employer Name Line
Line 2 1, enter the remaining portion of the name in this field. Left-justify and fill with
blanks. Position 214 must be alpha or numeric; hyphens must be surrounded by al-
phas or numerics; blanks must be surrounded by alphas or numerics or continued to
the end of the field (e.g., ab...b, aba).
Note: The same exceptions apply as set forth in “Employer Name Line 1”; also, the use of a percent sign (%) is not valid—
use c/o if necessary.
248–282Employer Street35 REQUIRED. Enter mailing address of employer. Street address should include
number, street, apartment or suite number (or P O Box if mail is not delivered to
street address). Left-justify and fill unused positions with blanks. Position 248 must
be alpha or numeric; hyphens must be surrounded by alphas or numerics; blanks
must be surrounded by alphas or numerics or continued to the end of the field (e.g.,
ab...b, aba).
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the address 210 N. Queen St.,
Suite #300 must be entered as 210 N Queen St Suite 300.
283–307 Employer City 25 REQUIRED.Enter the city, town or post office. Enter APO or FPO if applicable.
Do not enter state and ZIP Code information in this field. Position 283 must be
alpha or numerics; hyphens must be surrounded by alphas or numerics; blanks must
be surrounded by alphas or numerics or continued to the end of the field (e.g., ab...b,
aba).
Note: The only allowable characters are alphas, blanks, numerics, ampersands, hyphens and slashes. Punctuation such as
periods and commas are not allowed and will cause your file to be returned. For example, the city St. Louis must be entered
as St Louis.
308–309 Employer State2 REQUIRED. Enter location code of employer. Must use abbreviation shown in
Code the location abbreviation table for Employee Location Code (field positions
140–141).
310–318 Employer ZIP9 REQUIRED. Enter the valid nine digit ZIP Code of employer. IF YOU ONLY
Code HAVE FIVE (5) DIGITS AVAILABLE, LEFT-JUSTIFY AND ZERO FILL.
Blank fill only if employer’s ZIP Code is unavailable.
319–323 Transmitter 5REQUIRED.Enter 5-character Transmitter Control Code (TCC) assigned by
Control CodeIRS/MCC.
December 6, 19996361999–49 I.R.B.

FORM W-4 RECORD FORMAT
Field
PositionField Title Length Description and Remarks
324–331 Form W-4 Date8REQUIRED.Enter date located on signature line Form W-4. If no date entered,
generate current system date. Format as YYYYMMDD (e.g.19981231). Exempt
Status Form W-4 compare “year effective date” on Line 7 to signature date. If year
entered on Line 7 is later than signature date, use Form W-4 date as a 01/01 receipt
for subsequent calendar year (e.g., Line 7 of Form W-4 shows an exempt status date
of 2000 but signature date is 19991031, use 20000101 as Form W-4 date.)
332–348 BLANK17Enter Blanks.
349–350 BLANK2Enter blanks, or carriage return/line feed (CR/LF) characters.
FORM W-4 RECORD LAYOUT
1–910–4445–7980–114115–139
140–141142–150151152153154–156
157–163164–169170–178179–213214–247
248–282283–307308–309310–318319–323
324–331332–348349–350
SEC. 8. EFFECT ON OTHER DOCUMENTS
Revenue Procedure 98–24, Publication 1245 (Rev. 3–98), is superseded.
1999–49 I.R.B.637December 6, 1999
Employee Tax
Identification Number
Employee
Name
Line 1
Employee Name
Line 2
Employee Street
Address
Employee City
Employee State
Employee ZIP
Code
Marital
Status
Exempt
Status
BLANKAllowances
Additional AmountBLANK
Employer
Identification
Number
Employer
Name Line 1
Employer
Name Line 2
Employer StreetEmployer City
Employer State
Code
Employer ZIP
Code
Transmitter
Control Code
Form W-4 DateBLANK
BLANK or
CR/LF

SEC. 9. EFFECTIVE DATE
Use the record length and processing
capabilities of this revenue procedure to
file Forms W-4 submitted for the quarter
ending March 31, 2000 and for all subse-
quent filings.
Limitations on Benefits and
Contributions under Qualified
Plans; Cost-of-Living
Adjustments for 2000
1
Notice 99–55
Section 415 of the Internal Revenue
Code (the Code) provides for dollar limi-
tations on benefits and contributions
under qualified retirement plans. Section
415 also requires that the Commissioner
annually adjust these limits for cost-of-
living increases. Other limitations applic-
able to deferred compensation plans are
also affected by these adjustments.
Effective January 1, 2000, the limita-
tion for the annual benefit under § 415(b)-
(1)(A) for a defined benefit plan is in-
creased from $130,000 to $135,000. For
participants who separated from service
before January 1, 2000, the limitation for
defined benefit plans under § 415(b)-
(1)(B) is computed by multiplying the
participant’s compensation limitation, as
adjusted through 1999 by 1.0235. The
limitation for defined contribution plans
under § 415(c)(1)(A) remains unchanged
at $30,000.
The Code provides that various other
dollar amounts are to be adjusted at the
same time and in the same manner as the
dollar limitation of § 415(b)(1)(A) is ad-
justed. These dollar amounts and the ad-
justed amounts are as follows:
The limitation under § 402(g)(1) on the
exclusion for elective deferrals described
in § 402(g)(3) is increased from $10,000
to $10,500.
The dollar amount under § 409(o)(1)-
(C)(ii) for determining the maximum ac-
count balance in an employee stock own-
ership plan subject to a 5-year distribution
period is increased from $735,000 to
$755,000, while the dollar amount used to
determine the lengthening of the 5-year
distribution period is increased from
$145,000 to $150,000.
The limitation used in the definition of
a highly compensated employee under
§ 414(q)(1)(B) is increased from $80,000
to $85,000.
The annual compensation limit under
§§ 401(a)(17) and 404(l) is increased
from $160,000 to $170,000. The annual
compensation limit under § 401(a)(17) for
eligible participants in certain govern-
mental plans that, under the plan as in ef-
fect on July 1, 1993, allowed cost-of-liv-
ing adjustments to the compensation limi-
tation under the plan under § 401(a)(17)
to be taken into account, is increased from
$270,000 to $275,000.
The compensation amount under
§ 408(k)(2)(C) regarding simplified em-
ployee pension plans (SEPs) is increased
from $400 to $450. The compensation
amount under § 408(k)(3)(C) for SEPs is
increased from $160,000 to $170,000.
The limitation under § 408(p)(2)(A) re-
garding simple retirement accounts re-
mains unchanged at $6,000.
The limitation on deferrals under
§ 457(b)(2) and (c)(1) concerning eligible
deferred compensation plans of state and
local governments and of tax-exempt or-
ganizations remains unchanged at $8,000.
The compensation amounts under
§ 1.61–21(f)(5)(i) and (iii) of the Income
Tax Regulations concerning the definition
of “control employee” for fringe benefit
valuation purposes are increased from
$70,000 and $145,000, respectively, to
$75,000 and $150,000, respectively.
Administrators of defined benefit or
defined contribution plans that have re-
ceived favorable determination letters
should not request new determination let-
ters solely because of yearly amendments
to adjust maximum limitations in the
plans.
December 6, 19996381999–49 I.R.B.
1
Based on News Release IR-1999-80, dated October
19, 1999.

Notice of Proposed Rulemaking
and Notice of Public Hearing
Generation-Skipping Transfer
Issues
REG–103841–99
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing and notice of public hearing.
SUMMARY: This document contains
proposed regulations relating to the appli-
cation of the effective date rules of the
generation-skipping transfer (GST) tax
imposed under chapter 13 of the Internal
Revenue Code. The proposed regulations
provide guidance with respect to the type
of trust modifications that will not affect
the exempt status of a trust. In addition,
the proposed regulations clarify the appli-
cation of the effective date rules in the
case of property transferred pursuant to
the exercise of a general power of ap-
pointment. The proposed regulations are
necessary to provide guidance to taxpay-
ers so that they may properly determine if
chapter 13 of the Code is applicable to a
particular trust.
DATES: Written and electronic com-
ments must be received by February 16,
2000. Outlines of topics to be discussed
at the public hearing scheduled for March
15, 2000 at 10:00, must be received by
February 23, 2000.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–103841–99),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may also
be hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG–103841–99),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue, NW,
Washington, DC. Alternatively, taxpayers
may submit comments electronically via
the internet by selecting the “Tax Regs”
option on the IRS Home Page, or by sub-
mitting comments directly to the IRS in-
ternet site at http://www.irs.gov/tax regs/
reglist.html. The public hearing will be
held in room 2615, Internal Revenue Ser-
vice Building, 1111 Constitution Avenue,
NW, Washington, DC.
FOR FURTHER INFORMATION CON-
TACT: Concerning the proposed regula-
tions, James F. Hogan, (202) 622-3090;
concerning submissions of comments, the
hearing, and/or to be placed on the build-
ing access list to attend the hearing,
Michael L. Slaughter, (202) 622-7180
(not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
The GST tax provisions were enacted
as part of the Tax Reform Act of 1986
(TRA), Pub. L. 99–514, 1986–3 (Vol. 1)
C.B. 1, 634. Under section 1433(a) of the
TRA, the GST tax generally applies to all
generation-skipping transfers made after
October 22, 1986, the date the TRA was
enacted.
Section 1433(b)(2) of the TRA exempts
transfers from certain trusts from the GST
tax. Hereinafter, a trust that is exempt
under section 1433(b)(2) is referred to as
an “exempt trust.”
First, under section 1433(b)(2)(A) of
the TRA, the GST tax does not apply to
any transfer from a trust that was irrevo-
cable on September 25, 1985, to the ex-
tent the transfer is not made out of addi-
tions to the trust after September 25, 1985
(the day before the House Ways and
Means Committee began considering the
bill containing the GST provisions).
Under §26.2601–1(b)(1)(ii) of the Gener-
ation-skipping Transfer Tax Regulations,
a trust created on or before September 25,
1985, is considered irrevocable on that
date unless: (1) the settlor retained a
power that would cause the trust to be in-
cluded in the settlor’s gross estate for fed-
eral estate tax purposes by reason of sec-
tion 2038 of the Code, if the settlor had
died on September 25, 1985; or (2) the
property held in the trust is a life insur-
ance policy transferred by the insured and
the insured possessed, on September 25,
1985, any incident of ownership that
would have caused the value of the trust
to be included in the insured’s gross estate
under section 2042 of the Code if the in-
sured had died on September 25, 1985.
Second, under section 1433(b)(2)(B) of
the TRA, as amended by the Technical and
Miscellaneous Revenue Act of 1988, the
GST tax does not apply to any generation-
skipping transfer under a will or revocable
trust executed before October 22, 1986, if
the decedent died before January 1, 1987.
Third, under section 1433(b)(2)(C) of
the TRA, the GST tax does not apply to
any generation-skipping transfer under a
trust to the extent such trust consists of
property included in the gross estate of a
decedent or reinvestments thereof, but
only if the decedent was, on October 22,
1986, under a mental disability to change
the disposition of the decedent’s property
and did not regain competence to dispose
of the property before death.
Numerous taxpayers have requested
private letter rulings regarding the effect
that a proposed modification or construc-
tion will have on an exempt trust for GST
tax purposes. In rulings in this area, the
IRS has held that a modification will not
cause the trust to lose its exempt status if
the modification does not result in any
change in the quality, value, or timing of
any beneficial interest under the trust. Al-
though the statute does not specifically ad-
dress modifications to trusts that are ex-
empt under section 1433(b)(2) of the
TRA, Treasury and the IRS believe that a
trust that is modified such that none of the
beneficial interests change can be viewed
as the same trust that was in existence on
September 25, 1985.
The majority of the ruling requests re-
ceived by the Service concern proposed
modifications intended to enable the trust
to adapt to changed circumstances or to
enable the trustee to administer the trust
properly. These proposed modifications
often are not inconsistent with the purpose
of the TRA effective date provisions. Ac-
cordingly, as discussed below, these pro-
posed regulations adopt a more liberal
standard with respect to changes that may
be made to the trust without the loss of ex-
empt status. Treasury and the IRS intend
that the regulations, when finalized, pro-
vide sufficient guidance concerning mod-
ifications that the need for private letter
rulings will be greatly diminished. Com-
ments are requested regarding whether
the proposed regulations will achieve this
result.
1999–49 I.R.B.639December 6, 1999
Part IV. Items of General Interest

In addition, the proposed regulations
clarify the application of the effective
date provisions when the exercise or lapse
of a general power of appointment over
an otherwise grandfathered trust results in
property passing to a skip person.
Explanation of Provisions
1.Modifications to Trusts
The proposed regulations provide guid-
ance regarding the types of modifications,
constructions, and settlements of contro-
versies that will not cause a trust to lose
its exempt status. However, the rules
contained in these proposed regulations
apply only for GST tax purposes. Thus,
the rules do not apply in determining, for
example, whether a modification will re-
sult in a gift for gift tax purposes, or may
cause inclusion of the trust assets in the
gross estate, or may result in the realiza-
tion of gain for purposes of section 1001
of the Code.
Under the proposed regulations, a court
order in a construction proceeding that re-
solves an ambiguity in the terms of a trust
instrument will not cause the trust to lose
its exempt status. The judicial action,
however, must involve a bona fide issue
and the court’s decision must be consis-
tent with applicable state law that would
be applied by the highest court of the
state. Commissioner v. Estate of Bosch,
387 U.S. 456 (1967). Construction pro-
ceedings determine a settlor’s intent as of
the date the instrument became effective,
and thus, a court order construing an in-
strument that satisfies these requirements
does not alter or modify the terms of the
instrument.
Similarly, under the proposed regula-
tions, a court-approved settlement of a
bona fide controversy relating to the ad-
ministration of a trust or the construction
of terms of the governing instrument of a
trust will not cause a trust to lose its ex-
empt status. This will be the case, how-
ever, only if the settlement is the product
of arm’s length negotiations, and the set-
tlement is within the range of reasonable
outcomes under the governing instrument
and applicable state law addressing the
issues resolved by the settlement. See
Ahmanson Foundation v. United States,
674 F.2d 761 (9th Cir. 1981); Estate of
Suzuki v. Commissioner,T.C. Memo.
1991–624. For example, Aand Bare the
sole remainder beneficiaries of a trust es-
tablished by their parent. They disagree
as to the portion of the remainder each is
entitled to under the terms of the trust
when the trust terminates. A settlement
dividing the corpus equally among A, B,
and C, B’s child and the grandchild of the
parent who established the trust, would
not be considered within the range of rea-
sonable outcomes because Cis not a po-
tential remainderman under any construc-
tion of the trust agreement.
The proposed regulations also address
the situation in which a trustee distributes
trust principal to a new trust for the benefit
of succeeding generations. In some cases,
the governing instrument grants the trustee
broad discretionary powers to distribute
principal to or for the benefit of the trust
beneficiaries, outright or in trust. Under
these circumstances, distributions by the
trustee to trusts for the benefit of trust ben-
eficiaries will not cause the original trust
or the new trusts to lose exempt status pro-
vided the vesting of trust principal is not
postponed beyond the perpetuities period
applicable to the original trust.
Finally, under the proposed regulations,
a trust may be modified and remain ex-
empt for GST purposes. The modifica-
tion, however, must not shift a beneficial
interest in the trust to any beneficiary who
occupies a lower generation (as defined in
section 2651) than the person or persons
who held the beneficial interest prior to
the modification and must not extend the
time for vesting of any beneficial interest
in the trust beyond the period provided for
in the original trust.
2. Exercise of a General Power of
Appointment after September 25,
1985.
In Simpson v. United States,183 F.3d
812 (8th Cir. 1999), the decedent exer-
cised a testamentary general power of ap-
pointment granted under a marital trust
that was created in 1966. Pursuant to the
decedent’s exercise of the general power
of appointment, the property passed to her
grandchildren who were skip persons
under section 2612. The court concluded
that the transfer to the grandchildren was
exempt from the GST tax under section
1433(b)(2)(A) of the TRA, because the
transfer was “under a trust” that was ir-
revocable on September 25, 1985.
The facts in Simpson are similar to
those presented in Peterson Marital Trust
v. Commissioner,78 F.3d 795 (2nd Cir.
1996). In Peterson,the decedent had a
testamentary general power to appoint
property in a pre-September 25, 1985
marital trust created under her husband’s
will. Rather than appointing the property
outright, the taxpayer allowed the power
to lapse and the property passed to her
husband’s grandchildren, who were skip
persons under section 2612. The court
concluded that the transfer was subject to
the GST tax. The court noted that the ef-
fective date provisions in section
1433(b)(2) of the TRA were “designed . .
. to protect those taxpayers who, on the
basis of pre-existing rules, made arrange-
ments from which they could not reason-
ably escape and which, in retrospect, had
become singularly undesirable.” Peter-
son Marital Trust,at 801 (footnote omit-
ted). The court concluded that there was
no basis to apply the protection provided
in section 1433(b)(2) to the marital trust
because the arrangement could have been
changed to avoid the GST tax through the
exercise of the decedent’s general power
of appointment.
Treasury and the IRS believe that there
is no substantive difference between the
situation in Simpsonwhere property
passed pursuant to the exercise of a gen-
eral power of appointment and the situa-
tion in Peterson Marital Trustwhere
property passed pursuant to a lapse of a
general power of appointment. An indi-
vidual who has a general power of ap-
pointment has the equivalent of outright
ownership in the property. Estate of Kruz
v. Commissioner, 101 T.C. 44, 50-51, 59-
60 (1993). The value of the property sub-
ject to the general power is includible in
the powerholder’s gross estate at death
under section 2041(a). In either case, the
powerholder can avoid the consequences
of the GST tax by appointing the property
to nonskip persons. Therefore, as the
court noted in Peterson Marital Trust,
there is no basis for exempting such dis-
positions from the GST tax under the
TRA effective date provisions.
Accordingly, the proposed regulations
clarify that the transfer of property pur-
suant to the exercise, release, or lapse of a
general power of appointment created in a
pre-September 25, 1985 trust is not a
transfer under the trust, but rather is a
December 6, 19996401999–49 I.R.B.

transfer by the powerholder occurring
when the exercise, release, or lapse of the
power becomes effective, for purposes of
section 1433(b)(2)(A) of the TRA.
Special Analysis
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in EO
12866. Therefore, a regulatory assess-
ment is not required. It also has been de-
termined that section 553(b) of the Ad-
ministrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regula-
tions, and because these regulations do
not impose a collection of information on
small entities, the Regulatory Flexibility
Act (5 U.S.C. chapter 6) does not apply.
Therefore, a Regulatory Flexibility
Analysis is not required. Pursuant to sec-
tion 7805(f) of the Internal Revenue
Code, the regulations will be submitted to
the Small Business Administration for
comment on their impact on small busi-
ness.
Comments and Public Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any written (a signed
original and eight (8) copies) or electronic
comments that are submitted timely (in
the manner described in ADDRESSES) to
the IRS. Treasury and the IRS specifi-
cally request comments on the clarity of
the proposed regulations and how they
can be made easier to understand. All
comments will be available for public in-
spection and copying.
A public hearing has been scheduled
for March 15, 2000 at 10:00 a.m. in room
2615, Internal Revenue Building, 1111
Constitution Avenue, NW, Washington,
DC. Due to building security procedures,
visitors must enter at the 10th Street en-
trance, located between Constitution and
Pennsylvania Avenues, NW. In addition,
all visitors must present photo identifica-
tion to enter the building. Because of ac-
cess restrictions, visitors will not be ad-
mitted beyond the immediate entrance
area more than 15 minutes before the
hearing starts. For information about
having your name placed on the building
access list to attend the hearing, see the
“FOR FURTHER INFORMATION
CONTACT” section of this preamble.
The rules of 26 CFR 601.601(a)(3)
apply to the hearing. Persons that wish to
present oral comments at the hearing must
submit comments by February 16, 2000,
and submit an outline of the topics to be
discussed and the time to be devoted to
each topic (signed original and eight (8)
copies) by February 23, 2000. A period of
10 minutes will be allotted to each person
for making comments. An agenda show-
ing the scheduling of the speakers will be
prepared after the deadline for receiving
outlines has passed. Copies of the agenda
will be available free of charge at the
hearing.
Drafting Information
The principal author of these proposed
regulations is James F. Hogan, Office of
the Chief Counsel, IRS. Other personnel
from the IRS and Treasury Department
participated in their development.
*****
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 26 is pro-
posed to be amended as follows:
PART 26— GENERATION-SKIPPING
TRANSFER TAX REGULATIONS
UNDER THE TAX REFORM ACT OF
1986
Par. 1. The authority citation for part 26
continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In §26.2600–1 the Table is
amended under §26.2601 by revising the
entry for paragraphs (b) and (b)(4) and
adding an entry for paragraph (b)(5) to
read as follows:
§26.2600–1. Table of contents.
§26.2601–1. Effective dates.
* * * * *
(b) Exceptions
* * * * *
(4) Retention of trust’s exempt status in
the case of modifications, etc.
(5) Exceptions to additions rule.
* * * * *
Par. 3. Section 26.2601–1 is amended
as follows:
1. Adding four sentences to the end of
paragraph (b)(1)(i).
2. Redesignating paragraph (b)(4) as
paragraph (b)(5).
3. Adding a new paragraph (b)(4).
4. Paragraph (c) is amended by adding
a new sentence to the end of the para-
graph.
The additions read as follows:
§26.2601–1 Effective Dates.
* * * * *
(b) * * *
(1) * * *
(i) * * * Further, the rule in the first
sentence of this paragraph (b)(1)(i) does
not apply to a transfer of property pur-
suant to the exercise, release, or lapse of a
general power of appointment that is
treated as a taxable transfer under chapter
11 or chapter 12. The transfer is made by
the person holding the power at the time
the exercise, release, or lapse of the power
becomes effective, and is not considered a
transfer under a trust that was irrevocable
on September 25, 1985. See§26.2601-
1(b)(1)(v)(B) regarding the treatment of
the release, exercise, or lapse of a power
of appointment that will result in a con-
structive addition to a trust. See
§26.2652–1(a) for the definition of a
transferor.
* * * * *
(4) Retention of trust’s exempt status in
the case of modifications, etc. (i) In gen-
eral.This paragraph provides rules for de-
termining when a modification, judicial
construction, settlement agreement, or
trustee action with respect to a trust that is
exempt from the generation-skipping
transfer tax under paragraphs (b)(1), (b)(2),
or (b)(3) of this section (hereinafter re-
ferred to as an exempt trust) will not cause
the trust to lose its exempt status. The
rules contained in this paragraph (b)(4) are
applicable only for purposes of determin-
ing whether an exempt trust retains its ex-
empt status for generation-skipping trans-
fer tax purposes. The rules do not apply in
determining, for example, whether the
transaction results in a gift subject to gift
tax, or may cause the trust to be included in
the gross estate of a beneficiary, or may re-
sult in the realization of capital gain for
purposes of section 1001 of the Code.
(A) Trustee’s discretionary powers.
The distribution of trust principal from an
1999–49 I.R.B.641December 6, 1999

exempt trust to a new trust will not cause
the new trust to be subject to the provi-
sions of chapter 13, if—
(1) The terms of the governing instru-
ment of the exempt trust authorize the
trustee to make distributions to the new
trust without the consent or approval of
any beneficiary or court, and
(2) The terms of the governing instru-
ment of the new trust do not extend the
time for vesting of any beneficial interest
in the trust in a manner that may postpone
or suspend the vesting, absolute owner-
ship, or power of alienation of an interest
in property for a period, measured from
the date of creation of the original trust,
extending beyond any life in being at the
date of creation of the original trust plus a
period of 21 years, plus if necessary, a
reasonable period of gestation. For pur-
poses of this paragraph (b)(4)(i)(A), the
exercise of a trustee’s distributive power
that validly postpones or suspends the
vesting, absolute ownership, or power of
alienation of an interest in property for a
term of years that will not exceed 90 years
(measured from the date of creation of the
original trust) will not be considered an
exercise that postpones or suspends vest-
ing, absolute ownership, or the power of
alienation beyond the perpetuities period.
If a trustee’s distributive power is exer-
cised by creating another power, it is
deemed to be exercised to whatever ex-
tent the second power may be exercised.
(B) Settlement.A court-approved set-
tlement of a bona fide controversy regard-
ing the administration of the trust or the
construction of terms of the governing in-
strument will not cause an exempt trust to
be subject to the provisions of chapter 13,
if—
(1) The settlement is the product of
arm’s length negotiations, and
(2) The settlement is within the range
of reasonable outcomes under the govern-
ing instrument and applicable state law
addressing the issues resolved by the set-
tlement.
(C) Judicial construction.A judicial
construction of a governing instrument to
resolve an ambiguity in the terms of the
instrument or to correct a scrivener’s error
will not cause an exempt trust to be sub-
ject to the provisions of chapter 13, if—
(1) The judicial action involves a bona
fide issue, and
(2) The construction is consistent with
applicable state law that would be applied
by the highest court of the state.
(D) Other changes.A modification of
the governing instrument of an exempt
trust (including a trustee distribution, set-
tlement, or construction that does not sat-
isfy paragraphs (b)(4)(i)(A), (B), or (C) of
this subsection) by judicial reformation,
or nonjudicial reformation that is valid
under applicable state law, will not cause
an exempt trust to be subject to the provi-
sions of chapter 13, but only if—
(1) The modification does not shift a
beneficial interest in the trust to any bene-
ficiary who occupies a lower generation
(as defined in section 2651) than the per-
son or persons who held the beneficial in-
terest prior to the modification, and
(2) The modification does not extend
the time for vesting of any beneficial in-
terest in the trust beyond the period pro-
vided for in the original trust.
(E) Examples.The following examples
illustrate the application of this paragraph
(b)(4). In each example, assume that the
trust established in 1980 was irrevocable
for purposes of §26.2601–1(b)(1)(ii) and
that there have been no additions to any
trust after September 25, 1985.
Example 1. Trustee’s power to distribute princi-
pal authorized under trust instrument. In 1980,
Grantor established an irrevocable trust (Trust) for
the benefit of Grantor’s child, A, A’s spouse, and A’s
issue. At the time Trust was established, Ahad two
children, Band C. A corporate fiduciary was desig-
nated as trustee. Under the terms of Trust, the
trustee has the discretion to distribute all or part of
the trust income to one or more of the group consist-
ing of A, A’s spouse or A’s issue. The trustee is also
authorized to distribute all or part of the trust princi-
pal to one or more trusts for the benefit of A, A’s
spouse, or A’s issue under terms specified by the
trustee in the trustee’s discretion. Any trust estab-
lished under Trust, however, must terminate 21
years after the death of the last child of Ato die who
was alive at the time Trust was executed. Trust will
terminate on the death of A, at which time the re-
maining principal will be distributed to A’s issue, per
stirpes. In 2000, the trustee distributed part of
Trust’s principal to a new trust for the benefit of B
and Cand their issue. The new trust will terminate
21 years after the death of the survivor of Band C, at
which time the trust principal will be distributed to
the issue of Band C, per stirpes. The terms of the
governing instrument of Trust authorize the trustee
to make the distribution to a new trust without the
consent or approval of any beneficiary or court. In
addition, the terms of the governing instrument of
the new trust do not extend the time for vesting of
any beneficial interest in a manner that may post-
pone or suspend the vesting, absolute ownership or
power of alienation of an interest in property for a
period, measured from the date of creation of Trust,
extending beyond any life in being at the date of cre-
ation of Trust plus a period of 21 years, plus if nec-
essary, a reasonable period of gestation. Accord-
ingly, neither Trust nor the new trust will be subject
to the provisions of chapter 13 of the Code.
Example 2. Trustee’s power to distribute princi-
pal pursuant to state statute. In 1980, Grantor es-
tablished an irrevocable trust (Trust) for the benefit
of Grantor’s child, A, A’s spouse, and A’s issue. At
the time Trust was established, Ahad two children,
Band C. A corporate fiduciary was designated as
trustee. Under the terms of Trust, the trustee has the
discretion to distribute all or part of the trust income
or principal to one or more of the group consisting
of A, A’s spouse or A’s issue. Trust will terminate on
the death of A, at which time the trust principal will
be distributed to A’s issue, per stirpes. Under a state
statute applicable to Trust, a trustee who has the ab-
solute discretion under the terms of a testamentary
instrument or irrevocable inter vivos trust agreement
to invade the principal of a trust for the benefit of the
income beneficiaries of the trust, may exercise the
discretion by appointing so much or all of the princi-
pal of the trust in favor of a trustee of a trust under
an instrument other than that under which the power
to invade is created, or under the same instrument.
The trustee may take the action either with consent
of all the persons interested in the trust but without
prior court approval, or with court approval, upon
notice to all of the parties. The exercise of the dis-
cretion, however, must not reduce any fixed income
interest of any income beneficiary of the trust and
must be in favor of the beneficiaries of the trust. In
2000, the trustee distributes one-half of Trust’s prin-
cipal to a new trust that provides for the payment of
trust income to Afor life and further provides that, at
A’s death, one-half of the trust remainder will pass to
Bor B’s issue and one-half of the trust will pass to C
or C’s issue. Because the state statue requires the
consent of all of the parties, the transaction consti-
tutes a modification of Trust. However, because the
modification does not shift any beneficial interest in
Trust to a beneficiary or beneficiaries who occupy a
lower generation than the person or persons who
held the beneficial interest prior to the modification,
neither Trust nor the new trust will be subject to the
provisions of chapter 13 of the Code.
Example 3. Construction of an ambiguous term
in the instrument.In 1980, Grantor established an
irrevocable trust for the benefit of Grantor’s chil-
dren, Aand B, and their issue. The trust is to termi-
nate on the death of the last to die of Aand B, at
which time the principal is to be distributed to their
issue. However, the provision governing the termi-
nation of the trust is ambiguous regarding whether
the trust principal is to be distributed per stirpes,
only to the children of Aand B, or per capita among
the children, grandchildren, and more remote issue
of Aand B. The trustee files a construction suit with
the appropriate local court to resolve the ambiguity.
The court issues an order construing the instrument
to provide for per capita distributions to the children,
grandchildren, and more remote issue of Aand B liv-
ing at the time the trust terminates. The court’s con-
struction is consistent with applicable state law as it
December 6, 19996421999–49 I.R.B.

would be interpreted by the highest court of the state
and resolves a bona fide controversy regarding the
proper interpretation of the instrument. Therefore,
the trust will not be subject to the provisions of
chapter 13 of the Code.
Example 4. Change in trust situs.In 1980,
Grantor, who was domiciled in State X, executed an
irrevocable trust for the benefit of Grantor’s issue,
naming a State Xbank as trustee. Under the terms of
the trust, the trust is to terminate, in all events, no
later than 21 years after the death of the last to die of
certain designated individuals living at the time the
trust was executed. The provisions of the trust do not
specify that any particular state law is to govern the
administration and construction of the trust. In State
X, the common law rule against perpetuities applies
to trusts. In 2000, a State Ybank is named as sole
trustee. The effect of changing trustees is that the
situs of the trust changes to State Y, and the laws of
State Ygovern the administration and construction
of the trust. State Ylaw contains no rule against per-
petuities. In this case, however, in view of the terms
of the trust, the trust will terminate at the same time
before and after the change in situs. Accordingly,
the change in situs does not shift any beneficial in-
terest in the trust to a beneficiary who occupies a
lower generation (as defined in section 2651) than
the person or persons who held the beneficial inter-
est prior to the transfer. Furthermore, the change in
situs does not extend the time for vesting of any ben-
eficial interest in the trust beyond that provided for
in the original trust. Therefore, the trust will not be
subject to the provisions of chapter 13 of the Code.
If, in this example, as a result of the change in situs,
State Y law governed such that the time for vesting
was extended beyond the period prescribed under
the terms of the original trust instrument, the trust
would not retain exempt status.
Example 5. Division of a trust. In 1980, Grantor
established an irrevocable trust for the benefit of his
two children, Aand B, and their issue. Under the
terms of the trust, the trustee has the discretion to
distribute income and principal to A, B,and their
issue in such amounts as the trustee deems appropri-
ate. On the death of the last to die of Aand B, the
trust principal is to be distributed to the living issue
of Aand B, per stirpes. In 2000, the appropriate
local court approved the division of the trust into
two equal trusts, one for the benefit of Aand A’s
issue and one for the benefit of Band B’s issue. The
trust for Aand A’s issue provides that the trustee has
the discretion to distribute trust income and princi-
pal to Aand A’s issue in such amounts as the trustee
deems appropriate. On A’s death, the trust principal
is to be distributed equally to A’s issue, per stirpes.
The trust for Band B’s issue is identical (except for
the beneficiaries), and terminates at B’s death at
which time the trust principal is to be distributed
equally to B’s issue, per stirpes. The division of the
trust into two trusts does not shift any beneficial in-
terest in the trust to a beneficiary who occupies a
lower generation (as defined in section 2651) than
the person or persons who held the beneficial inter-
est prior to the division. In addition, the division
does not extend the time for vesting of any benefi-
cial interest in the trust beyond the period provided
for in the original trust. Therefore, the two parti-
tioned trusts resulting from the division will not be
subject to the provisions of chapter 13 of the Code.
Example 6. Merger of two trusts.In 1980,
Grantor established an irrevocable trust for
Grantor’s child and the child’s issue. In 1983,
Grantor’s spouse also established a separate irrevo-
cable trust for the benefit of the same child and
issue. The terms of the spouse’s trust and Grantor’s
trust are identical. In 2000, the appropriate local
court approved the merger of the two trusts into one
trust to save administrative costs and enhance the
management of the investments. The merger of the
two trusts does not shift any beneficial interest in the
trust to a beneficiary who occupies a lower genera-
tion (as defined in section 2651) than the person or
persons who held the beneficial interest prior to the
merger. In addition, the merger does not extend the
time for vesting of any beneficial interest in the trust
beyond the period provided for in the original trust.
Therefore, the trust that resulted from the merger
will not be subject to the provisions of chapter 13 of
the Code.
Example 7. Modification that does not shift an
interest to a lower generation.In 1980, Grantor es-
tablished an irrevocable trust for the benefit of
Grantor’s grandchildren, A, B,and C. The trust pro-
vides that income is to be paid to A, B,and C,in
equal shares for life. The trust further provides that,
upon the death of the first grandchild to die, one-
third of the principal is to be distributed to that
grandchild’s issue, per stirpes. Upon the death of
the second grandchild to die, one-half of the remain-
ing trust principal is to be distributed to that grand-
child’s issue, per stirpes, and upon the death of the
last grandchild to die, the remaining principal is to
be distributed to that grandchild’s issue, per stirpes.
In 2000, Abecame disabled. Subsequently, the
trustee, with the consent of Band C,petitioned the
appropriate local court and the court approved a
modification of the trust that increased A’s share of
trust income. The modification does not shift a por-
tion of the income interest to a beneficiary who oc-
cupies a generation lower than the generation occu-
pied by A, Band C,and does not extend the time for
vesting of any beneficial interest in the trust beyond
the period provided for in the original trust. Accord-
ingly, the trust as modified will not be subject to the
provisions of chapter 13 of the Code. However, the
modification increasing A’s share of trust income is
a transfer by Band Cto Afor federal gift tax pur-
poses.
(ii) Effective date. The rules in this
paragraph (b)(4) are effective as of [THE
DATE OF PUBLICATION IN THE FED-
ERAL REGISTER AS A FINAL REGU-
LATION].
* * * * *
(c) * * * The last four sentences in
paragraph (b)(1)(i) of this section are ef-
fective as of November 18, 1999.
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on No-
vember 17, 1999, 8:45 a.m., and published in the
issue of the Federal Register for November 18,
1999, 64 F.R. 62997)
Notice of Proposed Rulemaking
Definition of Last Known
Address
REG–104939–99
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemak-
ing.
SUMMARY: This document contains
proposed regulations defining “last
known address” in relation to the mailing
of notices of deficiency and other notices,
statements, and documents sent to a tax-
payer’s last known address. The pro-
posed regulations affect taxpayers who
receive notices of deficiency and other
notices, statements, and documents sent
to taxpayers’ last known addresses.
DATES: Written or electronic comments
and requests for a public hearing must be
received by February 22, 2000.
ADDRESSES: Send submissions to:
CC:DOM:CORP:R (REG–104939–99),
room 5226, Internal Revenue Service,
POB 7604, Ben Franklin Station, Wash-
ington, DC 20044. Submissions may be
hand delivered Monday through Friday
between the hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG–104939–99),
Courier’s Desk, Internal Revenue Ser-
vice, 1111 Constitution Avenue NW,
Washington, DC. Alternatively, taxpayers
may submit comments electronically via
the Internet by selecting the “Tax Regs”
option on the IRS Home Page, or by sub-
mitting comments directly to http://www.
irs.gov/tax_regs/regslist.html (the IRS In-
ternet site).
FOR FURTHER INFORMATION CON-
TACT: Concerning submissions, Michael
Slaughter, (202) 622-7180; concerning
the regulations, Charles A. Hall, (202)
622-4940 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
1999–49 I.R.B.643December 6, 1999

Background
In General
This document contains proposed
amendments to the Regulations on Proce-
dure and Administration (26 CFR part
301) under section 6212(b) relating to the
sufficiency of a notice of deficiency if it is
mailed to the last known address of a tax-
payer. This document also contains pro-
posed amendments to the Income Tax
Regulations (26 CFR part 1) and the Reg-
ulations on Procedure and Administration
(26 CFR part 301) to provide cross-refer-
ences to the proposed last known address
rules under section 6212(b) in order to
apply those rules to other notices, state-
ments, and documents required to be sent
to the last known address of a taxpayer.
Last Known Address
Many statutory and regulatory provi-
sions refer to the last known address of a
taxpayer. However, current law with re-
spect to the last known address of a tax-
payer has developed under section
6212(b), relating to the address for mail-
ing a notice of deficiency. Generally,
under section 6501, the IRS has three
years from the date a Federal tax return is
filed, or the due date for the return if the
return is filed early, to assess a deficiency.
Under section 6213, the IRS may not as-
sess or collect a deficiency until after the
notice of deficiency has been mailed to
the taxpayer giving the taxpayer an op-
portunity to petition the United States Tax
Court. Under section 6212(b), an other-
wise valid notice of deficiency is suffi-
cient if it is mailed to the taxpayer’s last
known address, even if it is not received
by the taxpayer.
The term last known addressis not de-
fined by statute or current regulations.
However, case law defines last known ad-
dressas the “address which appears on
the taxpayer’s most recently filed return,
unless [the IRS] has been given clear and
concise notification of a different ad-
dress.” Abeles v. Commissioner,91 T.C.
1019, 1035 (1988), acq.1989–2 C.B. 1.
The taxpayer’s most recently filed return
for this purpose is the last return filed by
the taxpayer from which, if the return was
properly processed, the address on the re-
turn was available to the IRS agent mail-
ing a notice of deficiency. Id.at 1035.
The taxpayer provides the IRS with
clear and concise notification of a change
of address by affirmatively informing the
IRS that the former address is not to be
used. See King v. Commissioner,857
F.2d 676, 681 (9th Cir. 1988); Monge v.
Commissioner,93 T.C. 22, 32 (1989). Al-
though the IRS must exercise due dili-
gence in ascertaining the last known ad-
dress and in mailing the notice of
deficiency to the correct address after hav-
ing become aware of a taxpayer’s change
of address, that duty does not require the
IRS to change the taxpayer’s last known
address based on information from third
party sources. See Grencewicz v. Com-
missioner, 60 T.C.M. (CCH) 1300, 1302
(1990). Accordingly, under current law,
clear and concise notification does not in-
clude taxpayer notification to third parties,
such as payors or the United States Postal
Service (USPS). See Adams v. Commis-
sioner,68 T.C.M. (CCH) 291, 294 (1994),
aff ’d sub nom., Miller v. Commissioner, 76
A.F.T.R.2d (RIA) 95-5903 (10th Cir.
1995) (forwarding order filed with USPS
not clear and concise notice to IRS); Sel-
man v. Commissioner,61 T.C.M. (CCH)
2184, 2186 (1991) (USPS change of ad-
dress form not notice to IRS because no
evidence IRS received form); Martin v.
Commissioner,64 T.C.M. (CCH) 1529,
1531 (1992) (citing Selman); Grencewicz
v. Commissioner,60 T.C.M. (CCH) 1300,
1302 (1990) (IRS not required to review
Forms 1099 and Schedule K-1); Green-
stein v. Commissioner, 60 T.C.M. (CCH)
379, 382 (1990) (Forms W-2G and Form
1099-DIV not sufficient notice).
Current IRS Procedures for Changing
Last Known Address
The IRS has prescribed rules for pro-
viding clear and concise notification of a
different address in Rev. Proc. 90–18
(1990–1 C.B. 491). Under Rev. Proc. 90–
18, a taxpayer must give clear and concise
written notification of a change of address
to the Internal Revenue Service Center
that serves the taxpayer’s old address or
to the Chief, Taxpayer Service Division,
in the local district office. The revenue
procedure applies to notices required to
be sent to a taxpayer’s last known address
under sections 982(c)(1), 6110(f)(3)(B),
6212(b), 6303(a), 6325(f)(2)(A), 6331(d)-
(2)(C), 6332(b)(1), 6335(a) and (b),
6901(g), and 7609(a)(2). Rev. Proc. 90–
18, section 2.01. Although not included
in Rev. Proc. 90–18, section 6110(f)(4)(B)
also requires a notice to be sent to a tax-
payer’s last known address. Since publi-
cation of Rev. Proc. 90–18, four new sec-
tions have been added to the Code that
reference last known address. See sec-
tions 6245(b)(1), 6320(a)(2)(C), 6330(a)-
(2)(C), and 7603(b)(1). Future updates of
Rev. Proc. 90–18 will incorporate these
new sections, as well as section 6110(f)-
(4)(B).
Under section 5.04 of Rev. Proc. 90–18,
taxpayers may provide the IRS with clear
and concise notification of a different ad-
dress in one of three ways. First, a tax-
payer may send the IRS a signed state-
ment informing the IRS that the taxpayer
wants the address of record changed to a
new address. In addition to the new ad-
dress, this notification must contain the
taxpayer’s full name, signature, old ad-
dress, and social security number and/or
employer identification number. Filers of
a joint return should provide both names,
social security numbers, and signatures.
Individuals who have changed last names,
for instance, due to marriage, should pro-
vide the last name shown on the most re-
cently filed return and the new last name.
In all cases, clear and concise written no-
tification must be specific as to a change
of address. Thus, a new address reflected
in the letterhead of taxpayer correspon-
dence will not by itself change a tax-
payer’s address of record.
Second, if the IRS sends correspon-
dence to the taxpayer that solicits or re-
quires a response by the taxpayer and the
taxpayer returns the correspondence to
the IRS with corrections marked on the
taxpayer’s address information, the return
of the correspondence will constitute
clear and concise written notification of a
change of address. The taxpayer’s signa-
ture on the correspondence is not re-
quired.
Third, the taxpayer may file a Form
8822, “Change of Address,” with the IRS.
In addition to the rules prescribed in
Rev. Proc. 90–18, the IRS currently ac-
cepts oral notification of a different ad-
dress, provided the request is made in the
context of an inquiry about the taxpayer’s
account. Courts have acknowledged the
validity of oral notification of a change of
December 6, 19996441999–49 I.R.B.

address for purposes of last known ad-
dress under section 6212(b), provided the
notification is sufficiently clear, is given
to a proper representative of the IRS, and
is established by competent proof. See
Mollet v. Commissioner, 82 T.C. 618,
625–26 (1984). Future updates of Rev.
Proc. 90–18 will permit the oral notifica-
tion of a change of address.
Explanation of Provisions
The proposed regulations define last
known address consistent with the defini-
tion set forth in Abeles.Accordingly, the
proposed regulations provide that the tax-
payer’s last known address is the address
that appears on the taxpayer’s most re-
cently filed and properly processed Fed-
eral tax return, unless the IRS is given
clear and concise notification of a differ-
ent address.
The proposed regulations also provide
that the IRS will use an address obtained
from the United States Postal Service
(USPS) as a taxpayer’s last known ad-
dress in the absence of a more recent ad-
dress. Although current law does not re-
quire the IRS to treat a taxpayer’s
notification to a third party, such as a
payor or the USPS, as clear and concise
notification of a different address for pur-
poses of determining a last known ad-
dress, the IRS and the Treasury Depart-
ment are not prohibited from prescribing
a rule that would allow the IRS to consult
a third party source for the taxpayer’s
most current address.
Thus, the proposed regulations provide
that beginning in May 2000, the IRS will
refer to the USPS’s National Change of
Address (NCOA) database to obtain a
taxpayer’s address for purposes of deter-
mining the taxpayer’s last known address.
The proposed regulations also provide
that the rules for last known address under
§301.6212–2 apply for purposes of other
notices, statements, and documents
mailed by the IRS to a taxpayer’s last
known address pursuant to the Internal
Revenue Code or regulations. In addi-
tion, the regulations propose to amend ex-
isting regulations that use the term “last
known address” to cross reference the
regulations to §301.6212–2.
NCOA Database
The NCOA database is a computerized
record of changes of address maintained
by the USPS. This database retains ad-
dress changes for a thirty-six month pe-
riod. USPS obtains the change of address
information from a properly submitted
USPS Form 3575, “Official Mail For-
warding Change of Address Form.” Both
businesses and individuals use the Form
3575. Individuals may indicate whether
the change of address applies to the indi-
vidual or, if applicable, the individual’s
entire family.
Updating Master File
In May 2000, and again in November
2000, and annually thereafter in each No-
vember, the Martinsburg Computing Cen-
ter (MCC) in Martinsburg, West Virginia,
will access the NCOA database to update
all taxpayer address records maintained in
the IRS’s automated master file for pur-
poses of updating the IRS’s mailing list.
Generally, if the taxpayer’s name and the
last known address maintained in the au-
tomated master file match the taxpayer’s
name and old mailing address contained
in the NCOA database, within certain tol-
erances, the IRS will use the new address
obtained from the NCOA database to up-
date the automated master file. The up-
dated address will be the taxpayer’s last
known address, unless the IRS is given
clear and concise notification of a differ-
ent address. However, due to IRS system
limitations, if taxpayers file jointly, but
the NCOA database contains change of
address information for only one spouse,
the earliest this rule will apply is January
2001. The IRS will publish further guid-
ance as to when this rule will apply to
these joint filers.
In addition, beginning in May 2000,
prior to mailing correspondence to any
particular taxpayer from an IRS Service
Center, the IRS will access the NCOA
database to determine if the taxpayer sub-
mitted a Form 3575 to the USPS with a
more recent address. If so, the following
will occur: (1) the correspondence will be
mailed to the address obtained from the
NCOA database, and (2) the IRS will use
the new address from the NCOA database
to update the automated master file. This
updated address will be the taxpayer’s last
known address. Similar to the exception
relating to the annual update, however,
this rule will not be effective any earlier
than January 2001 if taxpayers file jointly,
but the NCOA database contains change
of address information for only one
spouse.
If the taxpayer subsequently files a re-
turn with an address other than the ad-
dress on the Form 3575, the taxpayer’s
last known address will be the address on
the subsequently filed and properly
processed return. Similarly, if the tax-
payer submits a Form 8822, “Change of
Address,” (or other clear and concise no-
tification of a change of address) to the
IRS after the taxpayer submits a Form
3575 to the USPS, the taxpayer’s last
known address will be the address on the
Form 8822 (or on the clear and concise
notification). In each instance, the IRS’s
master file will be updated to reflect the
taxpayer’s new last known address.
The IRS will not access the NCOA
database prior to mailing correspondence
from district offices and posts of duty.
Unlike Service Centers, these locations
do not have the systems capability to
check the NCOA database for individual
mailings at this time. Instead, the IRS
will use the address stored in the auto-
mated master file. For purposes of corre-
spondence mailed from district offices
and posts of duty, the address on the IRS
automated master file, as updated through
the use of the NCOA database, will be the
taxpayer’s last known address.
Using the NCOA database will increase
customer service by allowing faster deliv-
ery of IRS correspondence to a taxpayer.
Rather than mailing correspondence to an
address which is no longer a taxpayer’s
address and relying on the USPS to for-
ward mail to the taxpayer’s most recent
address, the IRS will mail the correspon-
dence directly to the taxpayer’s most re-
cent address. In addition, by updating the
automated master file with the most re-
cent address, future IRS correspondence
will be mailed to the taxpayer’s most re-
cent address.
Although use of the NCOA database
will result in improved delivery in most
cases, such use does not completely elim-
inate the taxpayer’s need to provide the
IRS with clear and concise notification of
a different address. For instance, if the
taxpayer changes the address of a resi-
dence or business and submits a Form
3575 with the USPS, but does not wish to
change the taxpayer’s address for pur-
poses of IRS correspondence, then the
taxpayer must notify the IRS as provided
1999–49 I.R.B.645December 6, 1999

in Rev. Proc. 90–18. It should be noted,
however, that even if the taxpayer notifies
the IRS to continue using the old address
for IRS correspondence, the USPS may
forward the correspondence to the address
on the USPS Form 3575.
Licensing Agreement with USPS
To gain access to the NCOA database,
the IRS has applied to the USPS to be-
come a limited licensee of the NCOA
database. As a limited licensee, the IRS
will receive from the USPS a copy of the
entire thirty-six month NCOA database
and periodic updates thereto in electronic
format. The USPS will not have access to
confidential return information as a result
of this process. Moreover, unlike organi-
zations that have entered into general li-
censing agreements with the USPS for
use of the NCOA database, the IRS will
not provide name and address matching
services to commercial customers.
Rather, the IRS will only use the NCOA
database to update taxpayers’ addresses
maintained in the automated master file in
the manner prescribed by these regula-
tions. The IRS and the Treasury Depart-
ment invite comments regarding whether
the IRS should become a licensee for the
limited purpose of updating its automated
master file.
Special Analyses
It has been determined that this notice
of proposed rulemaking is not a signifi-
cant regulatory action as defined in Exec-
utive Order 12866. Therefore, a regula-
tory assessment is not required. It also
has been determined that section 553(b)
of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
regulations, and because these regulations
do not impose a collection of information
on small entities, the Regulatory Flexibil-
ity Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the
Internal Revenue Code, this notice of pro-
posed rulemaking will be submitted to the
Chief Counsel for Advocacy of the Small
Business Administration for comment on
its impact on small business.
Comments and Requests for a Public
Hearing
Before these proposed regulations are
adopted as final regulations, considera-
tion will be given to any electronic or
written comments (a signed original and
eight (8) copies) that are submitted timely
to the IRS. The IRS and Treasury Depart-
ment request comments on the clarity of
the proposed rules and how they can be
made easier to understand. All comments
will be available for public inspection and
copying. A public hearing may be sched-
uled if requested by any person that
timely submits comments. If a public
hearing is scheduled, notice of the date,
time, and place for the hearing will be
published in the Federal Register.
Drafting Information
The principal author of these regula-
tions is Charles A. Hall, Office of Assis-
tant Chief Counsel (Income Tax and Ac-
counting). However, other personnel
from the IRS and Treasury Department
participated in their development.
*****
Proposed Amendments to the Regulations
Accordingly, 26 CFR parts 1 and 301
are proposed to be amended as follows:
PART 1–INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. In §1.468A–5, paragraph
(c)(1)(ii) is amended by adding a sentence
at the end of the paragraph to read as fol-
lows:
§1.468A–5 Nuclear decommissioning
fund qualification requirements;
prohibitions against self-dealing;
disqualification of nuclear
decommissioning fund; termination of
fund upon substantial completion of
decommissioning.
* * * * *
(c) * * *
(1) * * *
(ii) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter.
* * * * *
Par. 3. In §1.503(a)–1 is amended by
adding a sentence at the end of the con-
cluding text of paragraph (c) to read as
follows:
§1.503(a)–1 Denial of exemption to
certain organizations engaged in
prohibited transactions.
* * * * *
(c) * * *
* * * For further guidance regarding the
definition of last known address, see
§301.6212–2 of this chapter.
* * * * *
Par. 4. In §1.547–2, paragraph
(b)(1)(v) is amended by adding a sentence
after the third sentence of the paragraph to
read as follows:
§1.547–2 Requirements for deficiency
dividends.
* * * * *
(b) * * *
(1) * * *
(v) * * * For further guidance regarding
the definition of last known address, see
§301.6212–2 of this chapter. * * *
* * * * *
Par. 5. In §1.856-6, paragraph (g)(5) is
amended by adding a sentence after the
first sentence of the paragraph to read as
follows:
§1.856–6 Foreclosure property.
* * * * *
(g) * * *
(5) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter. * * *
* * * * *
Par. 6. In §1.860–2, paragraph
(b)(1)(ii) is amended by adding a sentence
after the fourth sentence of the paragraph
to read as follows:
§1.860–2 Requirements for deficiency
dividends.
* * * * *
(b) * * *
(1) * * *
(ii) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter. * * *
* * * * *
December 6, 19996461999–49 I.R.B.

Par. 7. In §1.963–6, paragraph (c)(5) is
amended by adding a sentence after the
second sentence of the paragraph to read
as follows:
§1.963–6 Deficiency distribution.
* * * * *
(c) * * *
(5) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter. * * *
* * * * *
Par. 8. In §1.992–3, paragraph
(c)(3)(iv) is amended by adding a sen-
tence after the third sentence of the para-
graph to read as follows:
§1.992–3 Deficiency distributions to
meet qualification requirements.
* * * * *
(c) * * *
(3) * * *
(iv) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter. * * *
* * * * *
Par. 9. In §1.6081–2, paragraph (f) is
amended by adding a sentence at the end
of the paragraph to read as follows:
§1.6081–2 Automatic extension of time
to file partnership return of income.
* * * * *
(f) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter.
* * * * *
Par. 10. In §1.6081–3, paragraph (d) is
amended by adding a sentence at the end
of the paragraph to read as follows:
§1.6081–3 Automatic extension of time
for filing corporation income tax returns.
* * * * *
(d) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter.
* * * * *
Par. 11. In §1.6081–4, paragraph (c) is
amended by adding a sentence at the end
of the paragraph to read as follows:
§1.6081-4 Automatic extension of time
for filing individual income tax returns.
* * * * *
(c) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter.
* * * * *
Par. 12. In §1.6081-6, paragraph (d) is
amended by adding a sentence at the end
of the paragraph to read as follows:
§1.6081–6 Automatic extension of time
to file trust income tax return.
* * * * *
(d) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2 of this chapter.
* * * * *
Par. 13. In §1.6081–7, paragraph (d) is
amended by adding a sentence at the end
of the paragraph to read as follows:
§1.6081–7 Automatic extension of time
to file Real Estate Mortgage Investment
Conduit (REMIC) income tax return.
* * * * *
(d) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212-2 of this chapter.
* * * * *
PART 301—PROCEDURE AND
ADMINISTRATION
Par. 14. The authority citation for part
301 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 15. In §301.6110–4, paragraph
(c)(3) is amended by adding a sentence at
the end of the paragraph to read as follows:
§301.6110-4 Communications from third
parties.
* * * * *
(c) * * *
(3) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2.
* * * * *
Par. 16. In §301.6110–5, paragraph
(b)(4) is amended by adding a sentence at
the end of the paragraph to read as fol-
lows:
§301.6110–5 Notice and time
requirements; actions to restrain
disclosure; actions to obtain additional
disclosure.
* * * * *
(b) * * *
(4) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2.
* * * * *
Par. 17. In §301.6110–6, paragraph
(b)(2)(v) is amended by adding a sentence
at the end of the paragraph to read as fol-
lows:
§301.6110–6 Written determinations
issued in response to requests submitted
before November 1, 1976.
* * * * *
(b) * * *
(2) * * *
(v) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2.
* * * * *
Par. 18. Section 301.6212–2 is added
to read as follows:
§301.6212–2 Definition of last known
address.
(a) General rule. Except as provided in
paragraph (b)(2) of this section, a tax-
payer’s last known address is the address
that appears on the taxpayer’s most re-
cently filed and properly processed Fed-
eral tax return, unless the Internal Rev-
enue Service (IRS) is given clear and
concise notification of a different address.
(b) Address obtained from third party—
(1) In general.Except as provided in
paragraph (b)(2) of this section, change of
address information that a taxpayer pro-
vides to a third party, such as a payor or
another government agency, is not clear
and concise notification of a different ad-
dress for purposes of determining a last
known address under this section.
(2) Exception for address obtained
from the United States Postal Service—(i)
Annual update.Annually, the IRS will
1999–49 I.R.B.647December 6, 1999

update taxpayer addresses maintained in
IRS records by referring to data accumu-
lated and maintained in the United States
Postal Service (USPS) National Change
of Address database that retains change of
address information for thirty-six months
(NCOA database). Except as provided in
paragraph (b)(2)(ii) of this section, if the
taxpayer’s name and last known address
in IRS records match the taxpayer’s name
and old mailing address contained in the
NCOA database, within certain toler-
ances, the new address in the NCOA data-
base is the taxpayer’s last known address,
unless the IRS is given clear and concise
notification of a different address.
(ii) Update prior to mailing any notice,
statement or document from an IRS Ser-
vice Center. Prior to mailing any notice,
statement, or other document, including a
notice of deficiency, to the taxpayer from
an IRS Service Center, the IRS will up-
date the taxpayer’s last known address by
referring to the NCOA database. If the
taxpayer’s name and last known address
in IRS records match the taxpayer’s name
and old mailing address contained in the
NCOA database, within certain toler-
ances, the new address in the NCOA data-
base is the taxpayer’s last known address,
unless the IRS is given clear and concise
notification of a different address.
(iii) Duration of address obtained from
NCOA database.The address obtained
from the NCOA database under paragraph
(b)(2)(i) or (ii) of this section is the tax-
payer’s last known address until one of
the following events occurs—
(A) The taxpayer files and the IRS
properly processes a Federal tax return
with an address different from the address
obtained from the NCOA database; or
(B) The taxpayer provides the IRS with
clear and concise notification of a change
of address, as defined in procedures pre-
scribed by the Commissioner, that is dif-
ferent from the address obtained from the
NCOA database.
(3) Examples. The following examples
illustrate the rules of paragraph (b)(2) of
this section:
Example 1.(i) A is an unmarried taxpayer. The
address on A’s 1999 Form 1040, U.S. Individual In-
come Tax Return, filed on April 14, 2000, and 2000
Form 1040 filed on April 13, 2001, is 1234 Any-
place Street, Anytown, USA 43210. On May 15,
2001, A informs the USPS of a new permanent ad-
dress (9876 Newplace Street, Newtown, USA
12345) using the USPS Form 3575, “Official Mail
Forwarding Change of Address Form.” The change
of address is included in the USPS NCOA database.
(ii) In June 2001 the IRS determines a deficiency
for A’s 1999 tax year and prepares to issue the notice
of deficiency. When the IRS mails the notice of de-
ficiency from the Service Center, the IRS refers to
the NCOA database and updates the taxpayer’s last
known address to 9876 Newplace Street, Newtown,
USA 12345. On June 15, 2001, the IRS mails a no-
tice of deficiency to A at 9876 Newplace Street,
Newtown, USA 12345. For purposes of section
6212(b), the notice of deficiency mailed on June 15,
2001, is mailed to A’s last known address.
Example 2.(i) The facts are the same as in Ex-
ample 1,except that instead of determining a defi-
ciency for A’s 1999 tax year in June 2001, the IRS
determines a deficiency for A’s 1999 tax year in De-
cember 2001. The IRS performs its annual update
of addresses in November 2001. At this time the
taxpayer’s address maintained in IRS records was
changed to 9876 Newplace Street, Newtown, USA
12345.
(ii) On December 14, 2001, the IRS mails a no-
tice of deficiency to A at 9876 Newplace Street,
Newtown, USA 12345. For purposes of section
6212(b), the notice of deficiency mailed on Decem-
ber 14, 2001, is mailed to A’s last known address.
Example 3. (i) B is an unmarried taxpayer. The
address on B’s 1999 Form 1040, U.S. Individual In-
come Tax Return, filed on April 14, 2000, is 1234
Main Street, Mytown, USA 56789. In September
2000, B informs the USPS of a new permanent ad-
dress (4321 Maple Street, Ourtown, USA 54321)
using the USPS Form 3575, “Official Mail Forward-
ing Change of Address Form.”
(ii) In September 2000, the IRS determines a defi-
ciency for B’s 1998 tax year and prepares to issue the
notice of deficiency in the Service Center. On Sep-
tember 15, 2000, the IRS refers to the NCOA data-
base to update the taxpayer’s last known address.
Because B did not inform the USPS of a change of
address in sufficient time to be included in the
NCOA database on September 15, 2000, the NCOA
database does not yet contain any address informa-
tion for B. On September 15, 2000, the IRS mails a
notice of deficiency to B at 1234 Main Street, My-
town, USA 56789. For purposes of section 6212(b),
the notice of deficiency mailed on September 15,
2000, is mailed to B’s last known address.
Example 4.(i) C is an unmarried taxpayer. The
address on C’s 1998 Form 1040, U.S. Individual In-
come Tax Return, filed on April 15, 1999, and 1999
Form 1040 filed on April 14, 2000, is 2468 Spring
Street, Little City, USA 97531. On August 15, 2001,
C informs the USPS of a new permanent address
(8642 Peachtree Street, Big City, USA 13579) using
the USPS Form 3575, “Official Mail Forwarding
Change of Address Form.” The IRS performs its an-
nual update of addresses in November 2001.
(ii) In September 2001 the IRS district office for
Little City, USA determines a deficiency for C’s
1998 tax year and prepares to issue the notice. When
the IRS mails the notice of deficiency from the dis-
trict office, the IRS does not refer to the NCOA data-
base because IRS systems are not capable of check-
ing the NCOA database for individual mailings other
than for Service Center correspondence. On Septem-
ber 17, 2001, the IRS mails a notice of deficiency for
tax year 1998 to C at 2468 Spring Street, Little City,
USA 97531. For purposes of section 6212(b), the
notice of deficiency mailed on September 17, 2001,
is mailed to C’s last known address.
(iii) Also in September 2001, the IRS determines
a deficiency for C’s 1999 tax year. When the IRS
mails this notice of deficiency from the IRS Service
Center, the IRS refers to the NCOA database and up-
dates the taxpayer’s last known address to 8642
Peachtree Street, Big City, USA 13579. On Septem-
ber 18, 2001, the IRS mails a notice of deficiency
for tax year 1999 to C at 8642 Peachtree Street, Big
City, USA 13579. For purposes of section 6212(b),
the notice of deficiency mailed on September 18,
2001, is mailed to C’s last known address.
Example 5.The facts are the same as in Example
4,except that the IRS Service Center mails the no-
tice of deficiency for C’s 1999 tax year on Septem-
ber 10, 2001, after updating the taxpayer’s last
known address by referring to the NCOA database.
On September 17, 2001, when the district office pre-
pares to mail the notice of deficiency for C’s 1998
tax year by referring to the IRS’s automated master
file, the taxpayer’s address will appear as 8642
Peachtree Street, Big City, USA 13579. Thus, in
both cases, for purposes of section 6212(b), the tax-
payer’s last known address is 8642 Peachtree Street,
Big City, U.S.A. 13579.
(c) Last known address for all notices,
statements, and documents. The rules in
paragraphs (a) and (b) of this section
apply for purposes of determining whether
all notices, statements, or other documents
are mailed to a taxpayer’s last known ad-
dress whenever the term last known ad-
dress is used in the Internal Revenue Code
or the regulations thereunder.
(d) Effective Date—(1) In general. Ex-
cept as provided in paragraph (d)(2) of
this section, the rules prescribed by this
section apply to all notices, statements,
and other documents mailed on or after
May 1, 2000.
(2) Individual moves in the case of joint
filers.In the case of taxpayers who file
joint returns under section 6013, if the
NCOA database contains change of ad-
dress information for only one spouse,
paragraphs (b)(2) and (3) of this section
will not apply to notices, statements, and
other documents mailed before January 1,
2001.
Par. 19. In §301.6303–1, paragraph (a)
is amended by adding a sentence at the
end of the paragraph to read as follows:
§301.6303–1 Notice and demand for tax.
* * * * *
(a) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2.
* * * * *
December 6, 19996481999–49 I.R.B.

Par. 20. In §301.6305–1, paragraph
(b)(2)(ii) is revised to read as follows:
§301.6305–1 Assessment and collection
of certain liability.
* * * * *
(b) * * *
(2) * * *
(ii) The name, social security number,
and last known address of the individual
owing the assessed amount. For further
guidance regarding the definition of last
known address, see §301.6212–2;
* * * * *
Par. 21. In §301.6320–1T, paragraph
(a)(1) is amended by adding a sentence at
the end of the paragraph to read as fol-
lows:
§301.6320–1T Notice and opportunity
for hearing upon filing of notice of
Federal tax lien (temporary).
(a) * * * (1) * * * For further guidance
regarding the definition of last known ad-
dress, see §301.6212–2.
* * * * *
Par. 22. In §301.6325–1, paragraph
(f)(2)(ii)(a) is revised to read as follows:
§301.6325–1 Release of lien or
discharge of property.
* * * * *
(f) * * *
(2) * * *
(ii) * * *
(a) Mailing notice of the revocation to
the taxpayer at his last known address
(see §301.6212–2 for further guidance re-
garding the definition of last known ad-
dress); and
* * * * *
Par. 23. In §301.6330–1T, paragraph
(a)(1) is amended by adding a sentence at
the end of the paragraph to read as follows:
§301.6330–1T Notice and opportunity
for hearing prior to levy (temporary).
(a) * * * (1) * * * For further guidance
regarding the definition of last known ad-
dress, see §301.6212–2.
* * * * *
Par. 24. In §301.6331–2, paragraph
(a)(1) is amended by adding a sentence
after the second sentence of the paragraph
to read as follows:
§301.6331–2 Procedures and
restrictions on levies.
(a) * * * (1) * * * For further guidance
regarding the definition of last known ad-
dress, see §301.6212–2. * * *
* * * * *
Par. 25. Section 301.6332–2 is
amended as follows:
1. Paragraphs (b)(1) introductory text,
(b)(1)(i), and (b)(1)(ii) are redesignated as
paragraphs (b)(1)(i) introductory text,
(b)(1)(i)(A), and (b)(1)(i)(B), respec-
tively.
2. In newly designated paragraph
(b)(1)(i)(B), the text beginning with the
second sentence is redesignated as para-
graph (b)(1)(ii).
3. Newly designated paragraph
(b)(1)(ii) is amended by adding a sentence
after the second sentence of the para-
graph.
The addition reads as follows:
§301.6332–2 Surrender of property
subject to levy in the case of life
insurance and endowment contracts.
* * * * *
(b) * * * (1) In general.(i) * * *
(ii) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2. * * *
* * * * *
Par. 26. In §301.6335–1, paragraph
(b)(1) is amended by adding a sentence
after the third sentence of the paragraph to
read as follows:
§301.6335–1 Sale of seized property.
* * * * *
(b) * * * (1) * * * For further guidance
regarding the definition of last known ad-
dress, see §301.6212–2.
* * * * *
Par. 27. In §301.6503(c)–1, paragraph
(a) is amended by adding a sentence at the
end of the paragraph to read as follows:
§301.6503(c)–1 Suspension of running
of period of limitation; location of
property outside the United States or
removal of property from the United
States; taxpayer outside of United States.
(a) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2.
* * * * *
Par. 28. In §301.6903–1, paragraph (c)
is amended by adding a sentence after the
first sentence of the paragraph to read as
follows:
§301.6903–1 Notice of fiduciary
relationship.
* * * * *
(c) * * * For further guidance regard-
ing the definition of last known address,
see §301.6212–2. * * *
* * * * *
Robert E. Wenzel,
Deputy Commissioner of
Internal Revenue.
(Filed by the Office of the Federal Register on No-
vember 19, 1999, 8:45 a.m., and published in the
issue of the Federal Register for November 22,
1999, 64 F.R. 63768)
Announcement 99–112
This announcement corrects certain er-
rors which appear in Rev. Proc. 99–29,
1999–31, I.R.B. 138, which provides
specifications for filing Forms 1098,
1099, 5498, and W-2G, magnetically or
electronically. Revenue Procedure 99–29
is reprinted as Publication 1220, Specifi-
cations for Filing Forms 1098, 1099,
5498, and W-2G Magnetically or Elec-
tronically. Corrections to forms are also
included in this announcement.
Changes are listed by part, section and
form number. The actual wording changes
are highlighted using italicsand bold
print.
1999–49 I.R.B.649December 6, 1999

Part A. General
Sec. 9. Filing of Information Returns Magnetically/Electronically and Retention Requirements
.02 IRS/MCC allows for the use of computer-generated substitutes for Form 4804/4802. The substitutes must contain all infor-
mation requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signa-
ture is required. . .
Sec. 19. Major Problems Encountered
4. The Payment Amount Fields in the “B” Record Do Not Correspond to the Amount Codes in the “A” Record
If codes 2, 4, and 7 appear in the Amount Codes Field of the “A” Record, then the “B” Record must show payment amounts in only
Payment Amount Fields 2, 4, and 7, right-justified and unused positions must be zero (0) filled.
EXAMPLE: “A” RECORD247b/b/b/b/b/b/b/b/b/(‘b/’ denotes a blank)
(Pos. 28-39)
Part B. Magnetic Media Specifications
Sec. 3. Tape Cartridge Specifications
0.2 The tape cartridge records defined in this revenue procedure may be blocked subject to the following:
(c) All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descripter fields, which describe the length of the block or the logical records within the block. The number of logical
records within a block (the blocking factor) must be constant in every block with the exception of the last block which may be
shorter [see item (b) above]. The block length must be evenlydivisible by 750.
Sec. 4. 8mm, 4mm, and Quarter Inch Cartridge Specifications
.01 In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(3) The 8mm tape cartridge must meet the following specifications:
TRACKSDENSITYCAPACITY
120 (43245 BPI2.3Gb (10Gb)
121 (45434 BPI)5 Gb (20Gb)
Sec. 10. Payee “B” Record – General Field Description and Record Layouts
(14) Payee “B” Record Layout Positions 544–750 for Form 1099-R
Field
PositionField TitleLengthDescription and Remarks
545–546Distribution Code2Required.Enter at least one distribution code from the
(For a detailedtable below. More than one code may apply. If only one
explanation of thecode is required, it must be entered in position 545 and posi-
distribution codestion 546 must be blank. A blank in position 545 is not
see the “1999acceptable. Position 545 must contain a numeric code in all
Instructions forcases except when using Code D, E, F, G, H, J, L, M, P, R,
Forms 1099, 1098or S...
5498, and W-2G.”)
Part C. Electronic Filing Specifications
Sec. 6. Electronic Submissions
.05 If a file was submitted timely and is bad, the filer will have up to 60 days from the day the file was transmitted or 4 replace-
ment attempts within that 60 days period, whichever comes first, to transmit an acceptable file. If an acceptable file is not re-
ceived within 60 days or within 4 replacement attempts, within that 60 day period, then the payer could be subject to late filing pe-
nalities. This only applies to files originally sent electronically.
December 6, 19996501999–49 I.R.B.

Corrections to Form 4419 and Form 8508
The following forms, for the filer’s use, were printed incorrectly in the back of the Publication 1220. The correct wording below is
highlighted using italicsand bold print.These forms may be photocopied.
Form 4419: Application for Filing Information Returns Magnetically/Electronically
Type of Return To Be Reported
(Check appropriate box(s))
Important: Form W-2 information is sent to the Social Security Administration only. Do not use Form 4419 to request autho-
rization to file information magnetically. Contact SSA to request the appropriate application.
uForms 1098, 1099-series, 5498, 5498-MSA, and W-2Gu1042-S, (Tape, Tape Cartridges, 3-
1
⁄
2
0Diskette or Electronic)
(Tape, Tape Cartridges, 3-
1
⁄
2
0Diskette or Electronic)u8027 (Tape, Tape Cartridges, 3-
1
⁄
2
0Diskette or Electronic)
u8596 (Tape, Tape Cartridges, 3-
1
⁄
2
0Diskette or Electronic)
uW-4 (Tape, Tape Cartridges, 3-
1
⁄
2
0Diskette or Electronic)
Form 8508: Request for Waiver From Filing Information Returns on Magnetic Media
Box 3. Payer name and complete address (A separate 8508form must be filed for each payer requesting a waiver.)
Box 7. uW-2VI
1999–49 I.R.B.651December 6, 1999

December 6, 1999i1999–49 I.R.B.
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplified describes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus,
if an earlier ruling held that a principle
applied to A, and the new ruling holds
that the same principle also applies to B,
the earlier ruling is amplified. (Compare
with modified, below).
Clarified is used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously
published ruling and points out an essen-
tial difference between them.
Modified is used where the substance
of a previously published position is
being changed. Thus, if a prior ruling
held that a principle applied to A but not
to B, and the new ruling holds that it ap-
plies to both A and B, the prior ruling is
modified because it corrects a published
position. (Compare with amplified and
clarified, above).
Obsoleted describes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used
in a ruling that lists previously published
rulings that are obsoleted because of
changes in law or regulations. A ruling
may also be obsoleted because the sub-
stance has been included in regulations
subsequently adopted.
Revoked describes situations where the
position in the previously published rul-
ing is not correct and the correct position
is being stated in the new ruling.
Superseded describes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the
new ruling does more than restate the
substance of a prior ruling, a combination
of terms is used. For example, modified
and superseded describes a situation
where the substance of a previously pub-
lished ruling is being changed in part and
is continued without change in part and it
is desired to restate the valid portion of
the previously published ruling in a new
ruling that is self contained. In this case
the previously published ruling is first
modified and then, as modified, is super-
seded.
Supplemented is used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and
that list is expanded by adding further
names in subsequent rulings. After the
original ruling has been supplemented
several times, a new ruling may be pub-
lished that includes the list in the original
ruling and the additions, and supersedes
all prior rulings in the series.
Suspended is used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current use and for-
merly used will appear in material published in the
Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C.—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contribution Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign Corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statements of Procedral Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Definition of Terms

1999–49 I.R.B.iiDecember 6, 1999
Numerical Finding List
1
Bulletins 1999–27 through 1999–48
Announcements:
99–47, 1999–28 I.R.B. 29
99–64, 1999–27 I.R.B.7
99–65, 1999–27 I.R.B. 9
99–66, 1999–27 I.R.B. 9
99–67, 1999–28 I.R.B. 31
99–68, 1999–28 I.R.B. 31
99–69, 1999–28 I.R.B. 33
99–70, 1999–29 I.R.B. 118
99–71, 1999–31 I.R.B. 223
99–72, 1999–30 I.R.B. 132
99–73, 1999–30 I.R.B. 133
99–74, 1999–30 I.R.B. 133
99–75, 1999–30 I.R.B. 134
99–76, 1999–31 I.R.B. 223
99–77, 1999–32 I.R.B. 243
99–78, 1999–31 I.R.B. 229
99–79, 1999–31 I.R.B. 229
99–80, 1999–34 I.R.B. 310
99–81, 1999–32 I.R.B. 244
99–82, 1999–32 I.R.B. 244
99–83, 1999–32 I.R.B. 245
99–84, 1999–33 I.R.B. 248
99–85, 1999–33 I.R.B. 248
99–86, 1999–35 I.R.B. 332
99–87, 1999–35 I.R.B. 333
99–88, 1999–36 I.R.B. 407
99–89, 1999–36 I.R.B. 408
99–90, 1999–36 I.R.B. 409
99–91, 1999–37 I.R.B. 421
99–92, 1999–38 I.R.B. 433
99–93, 1999–36 I.R.B. 409
99–94, 1999–39 I.R.B. 437
99–95, 1999–42 I.R.B. 520
99–96, 1999–41 I.R.B. 504
99–97, 1999–41 I.R.B.505
99–98, 1999–42 I.R.B. 520
99–99, 1999–42 I.R.B. 522
99–100, 1999–42 I.R.B. 522
99–101, 1999–43 I.R.B. 544
99–102, 1999–43 I.R.B. 545
99–103, 1999–43 I.R.B. 546
99–104, 1999–44 I.R.B. 555
99–105, 1999–44 I.R.B. 555
99–106, 1999–45 I.R.B. 561
99–107, 1999–45 I.R.B. 561
99–108, 1999–46 I.R.B. 573
99–109, 1999–46 I.R.B. 573
99–110, 1999–46 I.R.B. 574
99–111, 1999–47 I.R.B. 587
Notices:
99–34, 1999–35 I.R.B. 323
99–35, 1999–28 I.R.B.26
99–37, 1999–30 I.R.B. 124
99–38, 1999–31 I.R.B. 138
99–39, 1999–34 I.R.B.313
99–40, 1999–35 I.R.B. 324
99–41, 1999–35 I.R.B. 325
99–42, 1999–35 I.R.B. 325
99–43, 1999–36 I.R.B. 344
99–44, 1999–35 I.R.B. 326
99–45, 1999–37 I.R.B. 415
99–46, 1999–37 I.R.B. 415
99–47, 1999–36 I.R.B. 391
Notices—Continued
99–48, 1999–38 I.R.B. 429
99–49, 1999–39 I.R.B. 436
99–50, 1999–40 I.R.B. 444
99–51, 1999–40 I.R.B. 447
99–52, 1999–43 I.R.B. 525
99–53, 1999–46 I.R.B.565
99–54, 1999–47 I.R.B.579
Proposed Regulations:
REG–252487–96, 1999–34 I.R.B. 303
REG–101519–97, 1999–29 I.R.B. 114
REG–107069–97, 1999–36 I.R.B. 346
REG–121063–97, 1999–43 I.R.B. 540
REG–106010–98, 1999–40 I.R.B. 493
REG–106527–98, 1999–34 I.R.B. 304
REG–108287–98, 1999–28 I.R.B.27
REG–113526–98, 1999–37 I.R.B. 417
REG–113909–98, 1999–30 I.R.B. 125
REG–116733–98, 1999–36 I.R.B. 392
REG–116991–98, 1999–32 I.R.B. 242
REG–121946–98, 1999–36 I.R.B. 403
REG–105237–99, 1999–35 I.R.B. 331
REG–105327–99, 1999–29 I.R.B. 117
REG–105565–99, 1999–37 I.R.B. 419
REG–115932–99, 1999–47 I.R.B. 583
REG–116125–99, 1999–44 I.R.B. 552
Railroad Retirement Quarterly Rate:
1999–45 I.R.B. 560
1999–46 I.R.B.563
Revenue Procedures:
99–28, 1999–29 I.R.B.109
99–29, 1999–31 I.R.B. 138
99–30, 1999–31 I.R.B. 221
99–31, 1999–34 I.R.B. 280
99–32, 1999–34 I.R.B. 296
99–33, 1999–34 I.R.B. 301
99–34, 1999–40 I.R.B. 450
99–35, 1999–41 I.R.B. 501
99–36, 1999–42 I.R.B. 509
99–37, 1999–42 I.R.B. 517
99–38, 1999–43 I.R.B. 525
99–39, 1999–43 I.R.B. 532
99–40, 1999–46 I.R.B. 565
99–41, 1999–46 I.R.B. 566
99–42, 1999–46 I.R.B. 568
99–43, 1999–47 I.R.B.579
99–44, 1999–48 I.R.B.598
Revenue Rulings:
99–29, 1999–27 I.R.B.3
99–30, 1999–28 I.R.B. 24
99–31, 1999–37 I.R.B. 410
99–32, 1999–31 I.R.B. 135
99–33, 1999–34 I.R.B. 251
99–34, 1999–33 I.R.B. 247
99–35, 1999–34 I.R.B. 278
99–36, 1999–35 I.R.B. 319
99–37, 1999–36 I.R.B. 336
99–38, 1999–36 I.R.B. 335
99–39, 1999–38 I.R.B. 424
99–40, 1999–40 I.R.B. 441
99–41, 1999–40 I.R.B. 439
99–42, 1999–41 I.R.B. 497
99–43, 1999–42 I.R.B. 506
99–44, 1999–44 I.R.B. 549
Revenue Rulings—Continued
99–45, 1999–45 I.R.B. 558
99–46, 1999–45 I.R.B. 557
99–47, 1999–48 I.R.B.588
Treasury Decisions:
8822, 1999–27 I.R.B.5
8823, 1999–29 I.R.B. 34
8824, 1999–29 I.R.B. 62
8825, 1999–28 I.R.B. 19
8826, 1999–29 I.R.B. 107
8827, 1999–30 I.R.B.120
8828, 1999–30 I.R.B.120
8829, 1999–32 I.R.B.235
8830, 1999–38 I.R.B. 430
8831, 1999–34 I.R.B.264
8832, 1999–35 I.R.B. 315
8833, 1999–36 I.R.B. 338
8834, 1999–34 I.R.B.251
8835, 1999–35 I.R.B.317
8836, 1999–37 I.R.B. 411
8837, 1999–38 I.R.B. 426
8838, 1999–38 I.R.B. 424
8839, 1999–41 I.R.B. 498
8840, 1999–47 I.R.B. 575
8841, 1999–48 I.R.B. 593
8842, 1999–47 I.R.B. 576
8843, 1999–48 I.R.B. 590
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 1999–1 through 1999–26
is in Internal Revenue Bulletin 1999–27, dated July
6, 1999.

December 6, 1999iii1999–49 I.R.B.
Finding List of Current Action on
Previously Published Items
1
Bulletins 1999–27 through 1999–48
Announcements:
99–5
Modified by
Ann. 99–106, 1999–45 I.R.B. 561
99–57
Modified by
Ann. 99–104, 1999–44 I.R.B. 555
99–59
Corrected by
Ann. 99–67, 1999–28 I.R.B. 31
Notices:
83–10
Modified by
Notice 99–44, 1999–35 I.R.B. 326
96–64
Modified by
Notice 99–40, 1999–35 I.R.B. 324
97–26
Modified by
Notice 99–41, 1999–35 I.R.B. 325
97–50
Modified and superseded by
Notice 99–41, 1999–35 I.R.B. 325
97–73
Modified by
Notice 99–37, 1999–30 I.R.B. 124
98–7
Modified by
Notice 99–37, 1999–30 I.R.B. 124
98–46
Modified by
Notice 99–37, 1999–30 I.R.B. 124
98–47
Modified and superseded by
Notice 99–41, 1999–35 I.R.B. 325
98–54
Modified by
Notice 99–37, 1999–30 I.R.B. 124
98–59
Modified by
Notice 99–37, 1999–30 I.R.B. 124
Proposed Regulations:
REG–208156–91
Corrected by
Ann. 99–65, 1999–27 I.R.B. 9
Revenue Procedures:
65–17
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
65–31
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
70–23
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
Revenue Procedures—Continued
71–35
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
72–22
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
72–46
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
72–48
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
72–53
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
89–48
Obsoleted (after Jan. 31, 2000) by
Notice 99–42, 1999–35 I.R.B. 325
89–49
Obsoleted (after Jan. 31, 2000) by
Notice 99–42, 1999–35 I.R.B. 325
96–9
Superseded by
Rev. Proc. 99–28, 1999–29 I.R.B. 109
96–17
Modified by
Rev. Proc. 99–39, 1999–43 I.R.B. 532
96–47
Amplified and superseded by
Rev. Proc. 99–40, 1999–46 I.R.B. 565
97–19
Modified by
Notice 99–41, 1999–35 I.R.B. 325
97–47
Amplified, clarified, modified, and superseded by
Rev. Proc. 99–39, 1999–43 I.R.B. 532
98–22
Clarified and supplemented by
Rev. Proc. 99–31, 1999–34 I.R.B. 280
98–35
Superseded by
Rev. Proc. 99–29, 1999–31 I.R.B. 138
98–37
Superseded by
Rev. Proc. 99–34, 1999–40 I.R.B. 450
98–63
Modified by Ann. 99–7 and superseded by
Rev. Proc. 99–38, 1999–43 I.R.B. 525
99–19
Modified and superseded by
Rev. Proc. 99–43, 1999–47 I.R.B. 579
Revenue Rulings:
77–475
Modified and superseded by
Rev. Rul. 99–40, 1999–40 I.R.B. 441
82–80
Superseded by
Rev. Proc. 99–32, 1999–34 I.R.B. 296
Revenue Rulings—Continued
84–58
Modified and superseded by
Rev. Rul. 99–40, 1999–40 I.R.B. 441
88–98
Modified and superseded by
Rev. Rul. 99–40, 1999–40 I.R.B. 441
88–225
Modified by
Rev. Proc. 99–44, 1999–48 I.R.B. 598
99–23
Corrected by
Ann. 99–89, 1999–36 I.R.B. 408
Treasury Decisions:
8476
Corrected by
Ann. 99–74, 1999–30 I.R.B. 133
8742
Corrected by
Ann. 99–73, 1999–30 I.R.B. 133
8793
Corrected by
Ann. 99–75, 1999–30 I.R.B. 134
8805
Corrected by
Ann. 99–66, 1999–27 I.R.B. 9
8806
Corrected by
Ann. 99–84, 1999–33 I.R.B. 248
8819
Corrected by
Ann. 99–47, 1999–28 I.R.B. 29
8823
Corrected by
Ann. 99–86, 1999–35 I.R.B. 332
8825
Corrected by
Ann. 99–100, 1999–42 I.R.B. 522
8827
Corrected by
Ann. 99–111, 1999–47 I.R.B. 587
1
A cumulative finding list of actions published in
Internal Revenue Bulletins 1999–1 through 1999–26
is in Internal Revenue Bulletin 1999–27, dated July
6, 1999.

Index
Internal Revenue Bulletins
1999–27 Through 1999–48
The index of items published in Internal
Revenue Bulletins 1999–1 through
1999–26 is in Internal Revenue Bulletin
1999–27, dated July 6, 1999.
The abbreviation and number in paren-
thesis following the index entry refer to
the specific item; numbers in roman and
italic type following the parenthesis refer
to the Internal Revenue Bulletin in which
the item may be found and the page
number on which it appears.
Key to Abbreviations:
AnnAnnouncement
RRRevenue Ruling
RPRevenue Procedure
TDTreasury Decision
CDCourt Decision
PLPublic Law
EOExecutive Order
DODelegation Order
TDOTreasury Department Order
TCTax Convention
SPRStatement of Procedural
Rules
PTEProhibited Transaction
Exemption
EMPLOYEE PLANS
Contracts; treatment as annuity contracts
(RP 44) 48, 598
Covered compensation tables for 2000
(RR 47) 48, 588
Employee stock ownership plans (Ann
84) 33, 248
Funding:
Full funding limitations, weighted av-
erage interest rate for July 1999 (No-
tice 38) 31,138; August 1999 (No-
tice 39) 34,313; September 1999
(Notice 49) 39,436; October 1999
(Notice 52) 43,52; November 1999
(Notice 54) 47, 579
Limitations on benefits and contributions,
questions and answers about 415(e)
(Notice 44) 35, 326
Qualifications:
Administrative programs; acceptable
correction methods and examples
under the Employee Plans Compli-
ance Resolution System (EPCRS)
(RP 31) 34, 280
Governmental plans; nondiscrimina-
tion rules (Notice 40) 35, 324
Regulations:
26 CFR 1.411(d)–4, corrected; em-
ployee stock ownership plans, quali-
fied retirement plan benefits (Ann
84) 33, 248
EMPLOYMENT TAX
Deposits:
De minimusrule (TD 8822) 30, 120
Electronic funds transfer (TD 8828) 30,
120
Magnetic media (Notice 42) 35,325
Electronic filing; magnetic media:
Form 941, Employer’s Quarterly
Federal Tax Return (RP 39) 43, 532
Information reporting seminars for
1999; correction (Ann 67) 28,31
Railroad retirement, quarterly rate begin-
ning July 1, 1999, 45, 560; October 1,
1999, 46, 563
Regulations:
26 CFR 31.3221–4, added; exception
from supplemental annuity tax on
railroad employers (TD 8832) 35,315
26 CFR 31.6302–1, amended; elec-
tronic funds transfers of federal de-
posits (TD 8828) 30, 120
26 CFR 31.6302–1(f)(4), revised;
31.6302–1T, removed; federal em-
ployment tax deposits – de minimis
rule (TD 8822) 27, 5
Supplemental annuity tax on railroad em-
ployers, exception (TD 8832) 35, 315
ESTATE TAX
Charitable remainder trusts; prevention of
abuse (REG–116125–99) 44, 552
Payment by electronic funds transfer (TD
8828) 30, 120
Proposed regulation:
26 CFR 1.643(a)–8, added; 1.664–1,
amended; charitable remainder trusts
(REG–116125–99) 44, 552
Regulations:
26 CFR 20.2031–7A, –7T, 20.7520–
1T, corrected; valuation of annuities,
interests for life or term of years, and
remainder or reversionary interests
(Ann 47) 28, 29
ESTATE TAX—Continued
26 CFR 20.6302–1, added; electronic
funds transfers of tax (TD 8828) 30,
120
Valuation of annuities, etc. (Ann 47) 28,
29
EXCISE TAX
Payment by electronic funds transfer (TD
8828) 30, 120
Regulations:
26 CFR 40.6302(a)–1, added; elec-
tronic funds transfers of tax (TD
8828) 30, 120
EXEMPT
ORGANIZATIONS
Administrative appeal procedures; inter-
est on bond issue (RP 35), 41, 501
Disclosure rules, private foundations
(REG–121946–98) 36, 403
Forms 990, 990-EZ, 990-T, and 990-PF,
clarify instructions; reporting activities
of disregarded entities (Ann 102) 43,
545
List of organizations classified as private
foundations (Ann 64) 27,7; (Ann 68)
28, 31; (Ann 70) 29,118;(Ann 78) 31,
229; (Ann 83) 32, 242; (Ann 85) 33,
248; (Ann 80) 34, 310; (Ann 87) 35,
333; (Ann 88) 36,407; (Ann 91) 37,
421; (Ann 92) 38,433; (Ann 94) 39,
437; (Ann 96) 41, 504; (Ann 103) 43,
546; (Ann 105) 44,555; (Ann 107) 45,
561; (Ann 109) 46,573
Proposed regulations:
26 CFR 301.6104(d)–1, removed;
301.6104(d)–2 redesignated as
301.6104(d)–0 and revised;
301.6104(d)–3 redesignated as
301.6104(d)–1 and amended;
301.6104(d)–4 redesignated as
301.6104(d)–2 and amended;
301.6104(d)–5 redesignated as
301.6104(d)–3 and amended; private
foundation disclosure rules (REG–
121946–98) 36, 403
Revocations (Ann 72) 30, 132; (Ann 94)
41, 505
Tax conventions:
Guidance concerning a competent au-
thority agreement between the U.S.
and Canada relating to Article XXI
(Exempt Organizations) (Notice 47)
36, 391
1999–49 I.R.B.ivDecember 6, 1999
EMPLOYEE PLANS—
Continued

GIFT TAX
Payment by electronic funds transfer (TD
8828) 30, 120
Proposed regulations:
26 CFR 25.2702–3, amended; defini-
tion of a qualified interest in a
grantor retained annuity trust and a
grantor retained unitrust (REG–
108287–98) 28, 27
Qualified interest, defined (REG–
108287–98) 28, 27
Regulations:
26 CFR 25.7520–1T, corrected; valua-
tion of annuities, interests for life or
term of years, and remainder or re-
versionary interests (Ann 47) 28, 29
26 CFR 25.6302–1, added; electronic
funds transfers of tax (TD 8828) 30,
120
Valuation of annuities, etc. (Ann 47) 28,
29
INCOME TAX
Acquisitions:
Allocation of purchase price (REG–
107069–97) 36,346
Recognition of gain; statutory pre-
sumption (REG–116733–98) 36, 392
S corporation; by a consolidated group
(TD 8842) 47, 576
Adequate disclosure; substantial under-
statement (RP 41) 46, 566
Adoption, taxpayer identification num-
bers (TD 8839) 41, 498
Allocation of income and deductions:
Adjustment of accounts (RP 32) 34,
296
Appeals:
Early referral to (RP 28) 29, 109
Customer service program (Ann 98)
42, 520
Prohibition on ex partecommunica-
tions during the Appeals process
(Notice 50) 40, 444
Balanced system for measuring organiza-
tional performance within the IRS (TD
8830) 38, 430
Capital gains; interest in partnerships, S
corporations, and trusts (REG–
106527–98) 34, 304
Charitable contributions, organization no
longer qualified (Ann 72) 30, 132
Consolidated returns, limitations:
Certain losses and deductions (TD
8823) 29, 34; correction (Ann 86)
35, 332
INCOME TAX—Continued
Foreign losses and separate limitation
losses (TD 8833) 36, 338
NOL carryforwards and built-in losses
(TD 8824) 29, 62
Cost-of-living adjustments, 2000 (RP 42)
46, 568
Credits:
Education credits; information report-
ing (Notice 37) 30, 124
Foreign tax credit:
Foreign losses and separate limita-
tion losses, consolidated returns
(TD 8833) 36, 338
Income subject to separate limita-
tions (Ann 66) 27, 9
Work opportunity tax credit; welfare-
to-work tax credit (Notice 51) 40,
447
Depletion:
Ground water for irrigation, Ogallala
Formation (Ann 90) 36, 409
Depreciation and amortization, Form
4562, correction to recovery period for
personal property (Ann 82) 32, 244
Depreciation–section 168:
Treasury depreciation study; request for
public comment (Notice 34) 35, 323
Early referral of issues to Appeals (RP 28)
29, 109
Electronic filing:
Form 1042-S; magnetic media specifi-
cations (Ann 79) 31, 229
Forms 1098, 1099, 5498, W-2G; mag-
netic media specifications (RP 29)
31,138
Enhanced oil recovery credit for 1999
(Notice 45) 37, 415
Estimated tax payments:
Elimination of magnetic tape (Notice
42) 35, 325
Interest on underpayments (RR 40), 40,
441
Farm income averaging (REG–121063–
97) 43, 540
Federal tax lien, withdrawal of notice
(REG–101519–97) 29, 114; public
hearing (Ann 108) 46,573
Foreign contingent debt (Ann 76) 31, 223
Foreign persons:
Distributions to (TD 8834) 34, 251
Grantor trust (TD 8831) 34, 264;
(REG–252487–96) 34, 303
Forms:
1096, 1098, 1099, 5498 and W-2G, sub-
stitute forms specifications (RP 34)
40, 450
INCOME TAX—Continued
4562, correction to recovery period for
personal property (Ann 82) 32, 244
5329, corrections to instructions (Ann
93) 36, 409
8853, corrections to instructions (Ann
93) 36, 409
10318, ground water for irrigation, ob-
solete (Ann 90) 36, 409
Individual development accounts (IDAs);
gifts (RR 44) 44, 549
Individual retirement arrangements:
Recharacterization (Ann 104) 44, 555
Recharacterizations and reconversions
(Ann 106) 45, 561
Inflation-indexed debt instruments (TD
8838) 38, 424
Information reporting; payments of gross
proceeds to attorneys (Notice 53) 46,
565
Installment sales, depreciable real
property (TD 8836) 37, 411
Insurance companies:
Closing agreements under section 7702
(Notice 48) 38, 429
Differential earnings rate and recom-
puted differential earnings rate for
mutual life insurance companies (RR
35) 34, 278
Foreign companies, minimum effec-
tively connected net investment in-
come (RP 30) 31, 221
Loss payment patterns and discount
factors; 1999 accident year (RP 36)
42, 509
Salvage discount factors; 1999 accident
year (RP 37) 42, 517
Interest:
Investment:
Federal short-term, mid-term, and
long-term rates for July 1999 (RR
29) 27, 3;August 1999 (RR 32)
31, 135; September 1999 (RR
37) 36, 336; October 1999 (RP
41) 40,439; November 1999 (RR
45) 45,558
Rates:
Underpayments and overpayments
for calendar quarter beginning
October 1, 1999 (RR 36) 35, 319
Netting; overlapping underpayments
and overpayments (RP 43) 47, 579
International taxation, twelfth annual
institute (Ann 99) 42, 522
December 6, 1999v1999–49 I.R.B.

INCOME TAX—Continued
Inventory:
LIFO:
Price indexes; department stores for
May 1999 (RR 30) 28, 24; June
1999 (RR 34) 33, 247; July 1999
(RR 31) 37, 410; August 1999
(RR42) 41, 497; September 1999
(RR 46) 45, 557
Litigation guideline memoranda (1/1/86-
10/20/98), available for public inspec-
tion (Ann 81) 32, 244
Long-term contracts, accounting for (Ann
65) 27, 9
Low-income housing tax credit:
Housing Opportunities for Persons
With AIDS (RR 39) 38, 424
Satisfactory bond; “bond factor”
amounts for the period July through
September 1999 (RR 38) 36, 335
Unused housing credit carryovers
under section 42(h)(3)(D) for 1999
(RP 33) 34, 301
Marginal production rates for 1999;
oil and gas (Notice 46) 37, 415
Meals, convenience of employer (Ann 77)
32, 243
Medical savings accounts:
Excess contributions (Ann 93) 36, 409
Pilot project “cut-off” data (Ann 95)
42, 520
Missing children photos (Ann 110) 46,
574
Nonrecognition exchanges, foreign per-
sons, U.S. real property interests
(Notice 43) 36, 344
Original issue discount (OID):
Tables no longer on IRS electronic bul-
letin board (Ann 71) 31, 223
Optional standard mileage rates; 2000
(RP 38) 43, 525
Partnership agreement amendments:
Cancellation of indebtedness (RR 43)
42, 506
Partnership returns:
Filing requirements:
Foreign and domestic partnerships
(TD 8841) 48, 593
Magnetic media (TD 8843) 48, 590
Page numbers change in Internal Revenue
Bulletins (Ann 69) 28, 33
Payment of tax:
Credit cards and debit cards (Ann 75)
30, 134
Electronic funds transfer (TD 8828) 30,
120
INCOME TAX—Continued
Private delivery services; timely filing or
payment (Notice 41) 35,325
Private foundations, organizations classi-
fied as (Ann 64) 27, 7; (Ann 68) 28, 31;
(Ann 70) 29, 118; (Ann 78) 31, 229;
(Ann 83) 32, 245; (Ann 85) 33, 248;
(Ann 80) 34, 310; (Ann 87) 35, 333;
(Ann 88) 36, 407; (Ann 91) 37,421;
(Ann 92) 38, 433; (Ann 94) 39, 437;
(Ann 96) 41,504; (Ann 103) 43, 546;
(Ann 105) 44, 555; (Ann 107) 45,461;
(Ann 109) 46,573
Proposed regulations:
26 CFR 1.1(h)–1, added; 1.1223–3,
added; 1.741–1, amended; capital
gains, partnership, subchapter S, and
trust provisions (REG–106527–98)
34, 304
26 CFR 1.110–1, added; qualified lessee
construction allowances for short-
term leases (REG–106010–98) 40,
493
26 CFR 1.148–1(e), amended; defini-
tion of investment-type property for
arbitrage and related restrictions ap-
plicable to tax-exempt bonds issued
by state and local governments
(REG–113526–98) 37, 417
26 CFR 1.148–5(e)(2)(iii), revised;
1.148–5(e)(2)(iv), removed; arbitrage
restrictions applicable to tax-exempt
bonds issued by state and local gov-
ernments (REG–105565– 99) 37, 419
26 CFR 1.163–7, amended; 1.1275–
1(f), revised; 1.1275–2(d), revised;
1.1275(k), added; reopenings of Trea-
sury securities and other debt instru-
ments (REG–115932–99) 47, 583
26 CFR 1.338–0 through –3, revised;
1.338–4 and 1.338–5 redesignated as
1.338–8 and 1.338–9; 1.338–4
through 1.338–7, added; 1.338(b)–1,
1.338(b)–2T, and 1.338(b)–3T,
removed; 1.338–10, added;
1.338(h)(10)–1 and 1.338(i)–1, re-
vised; 1.1060–1, added; 1.1060–1T,
removed; allocation of purchase price
in deemed and actual asset acquisi-
tions (REG–107069–97) 36,346
26 CFR 1.355–0, amended; 1.355–7,
added; recognition of gain on certain
distributions of stock or securities in
connection with acquisition (REG–
116733–98) 36, 392
INCOME TAX—Continued
26 CFR 1.460–4, corrected; accounting
for long-term contracts (Ann 65) 27,
9
26 CFR 1.671–2(e), revised; inbound
grantor trusts with foreign grantors
(REG–252487–96) 34, 303
26 CFR 1.904–5(k)(1), revised; 1.954–
0, –1, amended; 1.954–2(a)(5) and
(a)(6), added; 1.954–9, added; under
subpart F: withdrawal of guidance re-
lating to partnerships and branches;
new guidance relating to certain hy-
brid transactions (REG– 113909–98)
30, 125
26 CFR 1.1301–1, added; farm income
averaging (REG–121063–97) 43,
540
26 CFR 1.1397E–1, amended; qualified
zone academy bonds; obligations of
states and political subdivisions
(REG–105327–99) 29, 117
26 CFR 1.6109–2, paragraph (a), re-
vised and paragraph (d), added; alter-
native identifying numbers for in-
come tax return preparers (REG–
105237–99) 35, 331
26 CFR 301.6323(j)–1, added; with-
drawal of notice of federal tax lien in
certain circumstances (REG–
101519–97) 29, 114; public hearing
(Ann 108) 46,573
26 CFR 301.7122–1, added; compro-
mise of tax liabilities (REG–
116991–98) 32, 242
Publications:
527, corrected (Ann 82) 32, 244
Qualified lessee construction allowances;
short term leases (REG–106010–98)
40, 493
Qualified zone academy bonds:
Credit rate (Notice 35) 28, 26
Credit rate and reimbursement rules
(TD 8826) 29, 107; (REG–105327–
99) 29, 117
Regulations:
26 CFR 1.148–11, corrected; arbitrage
restrictions on tax-exempt bonds
(Ann 74) 30, 133
26 CFR 1.170A–12T, 1.7520–1T, cor-
rected; valuation of annuities, inter-
ests for life or terms of years, and re-
mainder or reversionary interests
(Ann 47) 28, 29
26 CFR 1.367(e)–0T, –1T, –2T, re-
moved; 1.367(e)–0, –1, –2, added;
1999–49 I.R.B.viDecember 6, 1999

1.6038B–1, –1T, amended; treat-
ment of distribution to foreign per-
sons under sections 367(e)(1) and (2)
(TD 8834) 34, 251
26 CFR 1.382–5T redesignated as
1.382–5, amended; 1.382–8T redes-
ignated as 1.382–8, amended;
1.382–1, –2, –2T, –4, amended; ap-
plication of section 382 in short tax-
able years and with respect to con-
trolled groups (TD 8825) 28, 19;
correction (Ann 100) 42, 522
26 CFR 1.453–12, added; capital gains,
installment sales (TD 8836) 37, 411
26 CFR 1.643(h)–1, added; 1.671–2(e),
revised; 1.671–2T, added; 1.672(f)–1
through –5, added; inbound grantor
trusts with foreign grantors (TD
8831) 34, 264
26 CFR 1.904–4, corrected; income
subject to separate limitations (Ann
66) 27, 9
26 CFR 1.904–5, amended; 1.904–5T,
removed; 1.954–1, amended; 1.954–
1T, –2T, removed; 1.954–9T, re-
moved; 301.7701–3, amended;
301.7701–3T, removed; removal of
regulations providing guidance
under subpart F relating to partner-
ships and branches (TD 8827) 30,
120; correction (Ann 111) 47,587
26 CFR 1.1271–0, amended; 1.1275–2,
amended; 1.1275–2(T), added;
1.1275–7, amended; reopenings of
Treasury securities (TD 8840) 47,
575
26 CFR 1.1275–7T redesignated as
1.1275–7; 1.1286–2T redesignated
as 1.1286–2 and amended; 1.148–4,
amended; 1.163–13, amended;
1.171–3, amended; 1.1271–0(b),
amended; 1.1275–4, amended; infla-
tion-indexed debt instruments (TD
8838) 38, 424
26 CFR 1.1362–3, amended;
1.1502–76, amended; acquisition of
an S corporation by a consolidated
group (TD 8842) 47, 576
26 CFR 1.1397E–1T, amended; quali-
fied zone academy bonds; obliga-
tions of states and political subdivi-
sions (TD 8826) 29, 107
26 CFR 1.1502–9T, removed;
1.1502–3T, amended; 1.1502–9 re-
designated as 1.1502–9A and
amended; 1.1502–9, added; overall
foreign losses and separate limitation
losses (TD 8833) 36, 338
26 CFR 1.1502–15T, –21T, –22T,
–23T, removed; 1.1502–1, amended;
1.1502–15, –21, –22, –23, added;
consolidated returns–limitations on
the use of certain losses and deduc-
tions (TD 8823) 29,34; correction
(Ann 86) 35, 332
26 CFR 1.1502–90T redesignated as
1.1502–90A; 1.1502–91T through
–99T, removed; 1.1502–90 through
–99, added; 1.1502–91A through
–99A, added; 1.1502–20, amended;
limitations on net operating loss
carryforwards and certain built-in
losses and credits following an own-
ership change of a consolidated
group (T.D 8824) 29, 62
26 CFR 1.6031–1, removed;
1.6031(a)–1, added; 1.6063–1,
amended; 301.6031–1, removed;
301.6031(a)–1, added; 602.101(b),
amended; partnership filing require-
ment (TD 8841) 48, 593
26 CFR 1.6109–2, paragraph (a), re-
vised and paragraph (d), added;
1.6109–2T, added; alternative identi-
fying numbers for income tax return
preparers (TD 8835) 35, 317
26 CFR 1.6302–4, revised; electronic
funds transfers of federal deposits
(TD 8828) 30, 120
26 CFR 301.6011–3, added;
301.6721–1, amended; magnetic
media requirements for partnership
returns (TD 8843) 48, 590
26 CFR 301.6109–1T, –3T, removed;
301.6109–1, amended; 301.6109–3,
added; 602.101(b), amended; IRS
adoption taxpayer identification
numbers (TD 8839) 41, 498
26 CFR 301.6311–2T, corrected; pay-
ment by credit card and debit card
(Ann 75) 30, 134
26 CFR 301.6402–5(h), added;
301.6402–6(n), revised; Tax Refund
Offset Program revised (TD 8837)
38, 426
26 CFR 301.7122–1, removed;
301.7122–0T and –1T, added; com-
promise of tax liabilities (TD 8829)
32, 235
26 CFR 602.101, corrected; require-
ments respecting the adoption or
change of accounting method; exten-
sion of time to make elections (Ann
73) 30, 133
26 CFR 801.1–6, added; establishment
of a balanced measurement system
for the IRS (TD 8830) 38, 430
Regulated investment companies;
preferential dividends (RP 40) 46, 565
Return preparers, identifying number (TD
8835) 35, 317; (REG–105237–99) 35,
331
S corporation; acquisition by a con-
solidated group (TD 8842) 47, 576
Short tax year, controlled group (TD
8825) 28, 19; correction (Ann 100) 42,
522
Standard Industry Fare Level (SIFL) rates
for the second half of 1999 (RR 33)
34, 251
Start-up expenditures (RR 23) 20, 3; cor-
rection (Ann 89) 36, 408
Student loan interest; information re-
porting (Notice 37) 30, 124
Subpart F:
Hybrid transactions (REG–113909–98)
30, 125
Partnerships and branches:
Guidance (REG–113909–98) 30,
125
Temporary regulations removed (TD
8827) 30, 120; correction (Ann
111) 47,587
Substitute forms; 1096, 1098, 1099, 5498
and W-2G; rules and specifications
(RP 34) 40, 450
Tax conventions:
Guidance concerning a competent au-
thority agreement between the U.S.
and Canada relating to Article XXI of
the tax convention (Notice 47) 36, 391
Tax-exempt bond:
Arbitrage restrictions (Ann 74) 30, 133
Investment-type property, definition for
arbitrage and related restrictions
(REG–113526–98) 37, 417
Tax refund offset program (TD 8837) 38,
426
Taxes compromise of (TD 8829) 32, 235;
(REG–116991–98) 32, 242
Taxpayer confidentiality; Department of
Treasury study (Ann 101) 43, 544
Treasury securities and other debt
instruments; reopenings (TD 8840) 47,
583; (REG–115932–99) 47, 575
Valuation of a remainder interest
(Ann 47) 28, 29
December 6, 1999vii1999–49 I.R.B.
INCOME TAX—ContinuedINCOME TAX—ContinuedINCOME TAX—Continued

INTERNAL REVENUE BULLETIN
The Introduction at the beginning of this issue describes the purpose and content of this publication. The weekly Internal Revenue
Bulletin is sold on a yearly subscription basis by the Superintendent of Documents. Current subscribers are notified by the
Superintendent of Documents when their subscriptions must be renewed.
CUMULATIVE BULLETINS
The contents of this weekly Bulletin are consolidated semiannually into a permanent, indexed, Cumulative Bulletin. These are
sold on a single copy basis and are not included as part of the subscription to the Internal Revenue Bulletin. Subscribers to the week-
ly Bulletin are notified when copies of the Cumulative Bulletin are available. Certain issues of Cumulative Bulletins are out of print
and are not available. Persons desiring available Cumulative Bulletins, which are listed on the reverse, may purchase them from the
Superintendent of Documents.
HOW TO ORDER
Check the publications and/or subscription(s) desired on the reverse, complete the order blank, enclose the proper remittance,
detach entire page, and mail to the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. Please
allow two to six weeks, plus mailing time, for delivery.
WE WELCOME COMMENTS ABOUT THE
INTERNAL REVENUE BULLETIN
If you have comments concerning the format or production of the Internal Revenue Bulletin or suggestions for improving it, we
would be pleased to hear from you. You can e-mail us your suggestions or comments through the IRS Internet Home Page
(www.irs.ustreas.gov) or write to the IRS Bulletin Unit, OP:FS:FP:P:1, Room 5617, 1111 Constitution Avenue NW, Washington,
DC 20224.