Internal Revenue Bulletin 2001-33 (PDF rendition): IRS Announcements

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. 2001–38, page 124.
Insurance companies; prevailing mortality and mor-
bidity tables. The prevailing mortality and morbidity tables
for contracts issued on or after January 1, 1999, are set
forth for use by insurance companies to compute their
reserves. Rev. Rul. 92–19 supplemented.
Rev. Rul. 2001–39, page 125.
U.S. corporation; wholly-owned Mexican subsidiary treat-
ed as a domestic corporation. This ruling obsoletes Rev. Rul.
70–379 (1970–2 C.B. 179) relating to a U.S. corporation elect-
ing under section 1504(d) of the Code to treat its wholly-owned
Mexican subsidiary as a domestic corporation for the purpose
of filing consolidated returns. Rev. Rul. 70–379 obsoleted.
Notice 2001–45, page 129.
Basis shifting tax shelter. The Service will challenge cer-
tain basis shifting tax avoidance transactions and intends to
disallow losses claimed or increase taxable income or gains.
Such transactions are designated as “listed transactions” for
purposes of sections 1.6011–4T(b)(2) and 301.6111–2T of
the regulations.
EMPLOYEE PLANS
Notice 2001–48, page 130.
Weighted average interest rate update. The weighted
average interest rate for July 2001 and the resulting per-
missible range of interest rates used to calculate current lia-
bility for purposes of the full funding limitation of section
412(c)(7) of the Code are set forth.
EXEMPT ORGANIZATIONS
Announcement 2001–81, page 175.
WorldCare, Inc., of La Mesa, CA, no longer qualifies as an
organization to which contributions are deductible under sec-
tion 170 of the Code.
ESTATE TAX
T.D. 8957, page 125.
Final regulations under sections 6075 and 6081 of the Code
provide the executor of a decedent’s estate an automatic
6-month extension of time to file Form 706,
United States
Estate (and Generation-Skipping Transfer) Tax Return,
beyond the 9 months provided for by section 6075(a).
ADMINISTRATIVE
Rev. Proc. 2001–40, page 130.
This procedure provides specifications for filing Form
1042–S, Foreign Person’s U.S. Source Income Subject to
Withholding, magnetically or electronically. Rev. Proc. 98–44
superseded.
Rev. Proc. 2001–41, page 173.
Technical advice furnished by the Associate Chief
Counsel (Corporate), Associate Chief Counsel (Financial
Institutions & Products), Associate Chief Counsel
(Income Tax & Accounting), Associate Chief Counsel
(International), Associate Chief Counsel (Passthroughs &
Special Industries), Associate Chief Counsel (Procedure
& Administration), and Division Counsel/Associate Chief
Counsel (Tax Exempt and Government Entities). This pro-
cedure modifies Rev. Proc. 2001–2 (2001–1 I.R.B. 79) to clar-
ify that technical advice will not be issued on frivolous issues
and to provide a procedure for expedited review of denials of
technical advice when a taxpayer requests advice on frivolous
issues. Rev. Proc. 2001–2 modified.
Internal Revenue
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Bulletin No. 2001–33
August 13, 2001
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
Announcement of Declaratory Judgement Proceedings Under Section 7428 begins on page 175.
Finding Lists begin on page ii.

August 13, 20012001–33 I.R.B.
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 Other Related Items, 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.

Section 807.—Rules for Certain
Reserves
Insurance companies; prevailing
mortality and morbidity tables. The
prevailing mortality and morbidity tables
for contracts issued since 1999 are set
forth for use by insurance companies to
compute their reserves.
Rev. Rul. 2001–38
For purposes of section 807(d)(5) of
the Internal Revenue Code, this ruling
clarifies and supplements the schedule of
prevailing commissioners’ standard tables
of mortality and morbidity set forth in
Part I of Rev. Rul. 92–19, 1992–1 C.B.
227. This information is to be used by in-
surance companies in computing their re-
serves for (1) life insurance and
supplementary total and permanent dis-
ability benefits, (2) individual annuities
and pure endowments, and (3) group an-
nuities and pure endowments.
August 13, 20011242001–33 I.R.B.
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Schedule of Prevailing Commissioners’ Standard Tables — Products Issued In
1992–2000 Inclusive.
TABLES
1
Life InsuranceIndividualGroup
and Supplementary Total andAnnuities andAnnuities and
Permanent Disability BenefitsPure EndowmentsPure Endowments
Year
2
Ordinary ContractsIndustrial
LifeDisabilityPolicies
1992
1993
1994
1995
1996
1997
1998
1999Annuity 2000 Mortality Table 94 GAR
2000
NOTES TO THE SCHEDULE
OF PREVAILING COMMISSIONERS’ TABLES
1.Stated in the schedule is the most recent mortality table permitted as of January 1 of the year for valuation of policies of the
specified type issued in that year under the valuation laws of at least 26 states. For policies issued prior to 1992, please refer
to Rev. Rul. 92–19, 1992–1 C.B. 227 which clarified and supplemented Rev. Rul. 87–26, 1987–1 C.B. 158.
The abbreviations used stand for the following mortality tables:
Annuity 2000 Mortality Table:
The Annuity 2000 Mortality Table is an individual, mortality table and is a sex distinct table. This table is not applic-
able to contracts based on settlements of various forms of claims pertaining to court settlements or out of court set-
tlements from tort actions, settlements involving similar actions such as worker compensation claims or settlements
of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability pay-
ment. For these contracts, the 1983 Table “a” should be used.
94 GAR:1994 Group Annuity Reserving Table
The 94 GAR is a sex-distinct table to determine the reserves for a group.
2.The year indicated is the first year the table may be used for federal income tax purposes. Section 807(d)(5)(A) states that the
specified table may be used as the prevailing table from the beginning of the calendar year in which the table becomes pre-
vailing. The former table, however, may be used as the prevailing table for that calendar year and three subsequent years. Rev.
Rul. 87–26.

EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 92–19 is supplemented by the
addition to Part I of that ruling of the
commissioners’ standard tables of mortal-
ity and morbidity under § 807 for certain
insurance products issued after January 1,
1999. Parts II, III, and IV are not affected
by this ruling.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Sumit Mitra of the Office of As-
sistant Chief Counsel (Financial Institu-
tions and Products). For further informa-
tion regarding this revenue ruling, contact
either him or Donald J. Drees, Jr. at (202)
622-3970 (not a toll-free call).
Section 1504(d).—Subsidiary
Formed To Comply With Foreign
Law
U.S. corporation; wholly-owned
Mexican subsidiary treated as a domes-
tic corporation. This ruling obsoletes
Rev. Rul. 70–379 (1970–2 C.B. 179) re-
lating to U.S. corporations electing under
section 1504(d) of the Code to treat its
wholly-owned Mexican subsidiary as a
domestic corporation for the purpose of
filing consolidated returns.
Rev. Rul. 2001–39
This revenue ruling obsoletes Rev. Rul.
70–379 (1970–2 C.B. 179).
Rev. Rul. 70–379 concluded that a
U.S. corporation may elect under sec-
tion 1504(d) of the Internal Revenue
Code (the “Code”) to treat its wholly-
owned Mexican subsidiary as a domes-
tic corporation for the purpose of filing
consolidated returns because the sub-
sidiary was organized under the laws of
Mexico solely to comply with Mexican
law as to title and operation of property
in Mexico. Because the U.S. parent
corporation could not directly own
Mexican real estate under Mexican law,
organization of the Mexican subsidiary
was necessary in order to comply with
Mexican law relating to the title of real
estate.
The rationale underlying Rev. Rul.
70–379 was based, in part, upon Mexi-
can law and legal authorities that inter-
preted Article 27 of the Mexican Consti-
tution to prohibit direct ownership of
Mexican real estate by certain non-Mex-
ican residents. In particular, it was
based on Article 34 of the Mexican Na-
tionality and Naturalization Law, and
the Official Declarations of the Secre-
tariat of Foreign Relations, issued Janu-
ary 7, 1936, representing an official in-
terpretation of Article 27 of the Mexican
Constitution.
Since the publication of Rev. Rul.
70–379, the Mexican legal interpretations
on which the ruling were based have been
subject to considerable revision. Most
significantly for purposes of Rev. Rul.
70–379, Article 10A of the Mexican For-
eign Investment Law of 1993, as
amended effective December 25, 1996
(“1996 Amendment”), now allows direct
foreign ownership of real estate in certain
circumstances. As a result, after the ef-
fective date of the 1996 Amendment, a
U.S. corporation in these circumstances
does not meet the requirements for an
election under section 1504(d) to treat its
wholly-owned Mexican subsidiary as a
domestic corporation for the purpose of
filing consolidated returns because orga-
nization of such subsidiary would not be
necessary to comply with Mexican law as
to the title and operation of property in
Mexico. Accordingly, the IRS is obsolet-
ing Rev. Rul. 70–379, and taxpayers may
not rely upon it on or after December 25,
1996 (the effective date of the 1996
Amendment). Application of section
1504(d) in circumstances other than those
addressed by the 1996 Amendment con-
tinues to require an assessment of the sta-
tus of the relevant Mexican law with re-
spect to Mexican real estate holdings.
EFFECT ON OTHER REVENUE
RULINGS
Rev. Rul. 70–379, 1970–2 C.B. 179, is
obsoleted effective December 25, 1996.
DRAFTING INFORMATION
The principal author of this revenue
ruling is Kenneth Allison of the Associ-
ate Chief Counsel (International)
(CC:INTL:Br4). For further information
regarding this revenue ruling, contact Mr.
Allison at (202) 622-3860 (not a toll-free
call).
Section 6075.—Time for Filing
Estate and Gift Tax Returns
26 CFR 20.6075–1: Returns; time for fil-
ing estate tax return.
T.D. 8957
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Parts 20 and 602
Estate Tax Return; Form 706,
Extension To File
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains
final regulations relating to the filing of
an application for an automatic 6-month
extension of time to file an estate tax re-
turn (Form 706). The final regulations
provide guidance to executors of dece-
dents’ estates on how to properly file the
application for the automatic extension.
DATES: Effective Date: These regula-
tions are effective July 25, 2001.
Applicability Date: For dates of applic-
ability, see §§20.6075–1 and 20.6081–
1(e).
FOR FURTHER INFORMATION CON-
TACT: Mary Berman at (202) 622-3090
(not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under control
number 1545–1707. The collection of in-
formation in these final regulations is in
§20.6081–1. To receive an extension of
time to file an estate tax return, the execu-
tor of a decedent’s estate must file Form
4768, “Application for Extension of Time
To File a Return and/or Pay U.S. Estate
(and Generation-Skipping Transfer)
Taxes.” This information is required to
obtain a benefit (an automatic 6-month
extension of time to file an estate tax re-
turn). The collection of information is
2001–33 I.R.B.125August 13, 2001

August 13, 20011262001–33 I.R.B.
mandatory if the extension is requested.
The likely respondents are executors of
decedents’ estates.
An agency may not conduct or sponsor,
and a person is not required to respond to,
a collection of information unless it dis-
plays a valid control number assigned by
the Office of Management and Budget.
The reporting burden contained in
§20.6081–1 is reflected in the burden of
Form 4768.
Comments concerning the accuracy of
this burden estimate and suggestions for
reducing this burden should be sent to the
Internal Revenue Service, Attn: IRS Re-
ports Clearance Officer, W:CAR:
MP:FP:S:O, Washington, DC 20224 and
to the Office of Management and Bud-
get, Attn: Desk Officer for the Depart-
ment of the Treasury, Office of Informa-
tion and Regulatory Affairs, Washington,
DC 20503.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mater-
ial in the administration of any internal
revenue law. Generally, tax returns and
tax information are confidential, as re-
quired by 26 U.S.C. 6103.
Background
On October 20, 2000, the IRS published
in the Federal Register (65 FR 63025) a no-
tice of proposed rulemaking (REG–
106511–00, 2000–45 I.R.B. 465) relating
to the filing of an application for an auto-
matic 6-month extension of time to file
Form 706, “United States Estate (and Gen-
eration-Skipping Transfer) Tax Return.”
This document adopts final regulations
with respect to that notice of proposed rule-
making. Written comments were received
with respect to the proposed regulations,
and a public hearing was held on January
24, 2001. A summary of the principal com-
ments received is provided below.
In general, under the proposed regula-
tions the executor of a decedent’s estate is
allowed an automatic 6-month extension
of time to file Form 706 beyond the 9
months provided for by section 6075(a).
The application for the automatic exten-
sion must be submitted on Form 4768.
The application must be filed with the
IRS on or before the date prescribed by
section 6075(a) for filing the Form 706,
and it must include an estimate of the full
amount of tax due.
The proposed regulations refer to “the
person who is required to file the return”
as the person who may request an exten-
sion of time to file. Since §20.6018–2 of
the Estate Tax Regulations requires that
the return be filed jointly by all executors
in situations in which there is more than
one executor, one commentator pointed
out that “the person who is required to file
the return” could be interpreted as mean-
ing that all executors must sign the re-
quest for an extension of time to file in
situations in which there is more than one
executor.
Also, the Treasury Department and the
IRS recognize that “the person who is re-
quired to file the return” may be inter-
preted to mean that only an executor may
sign a request for an extension to file.
However, as indicated on Form 4768, the
request may be signed by an attorney, cer-
tified public accountant, or enrolled agent
authorized by the executor, or by an autho-
rized agent holding a power of attorney.
In response to the comment, the quoted
language in the proposed regulations has
been deleted from the final regulations.
Also, the Form 4768 will be revised to
clarify that it is only necessary for one ex-
ecutor to sign the request for an extension
of time to file in situations in which there
is more than one executor.
Two commentators suggested that the
final regulations clearly provide that pay-
ment of the tax is not a prerequisite to ob-
taining an extension of time to file, and
that an extension of time to file does not
operate to extend the time for payment of
the tax. In response to this suggestion, the
final regulations provide that, if an exten-
sion of time to file has been obtained but
no extension of time to pay has been
granted, interest will be due on the tax not
paid by the due date and the estate will be
subject to all applicable late payment
penalties.
One commentator suggested that, in
addition to the automatic 6-month exten-
sion of time to file, the regulations pro-
vide an automatic extension of time to
pay. The commentator suggested that the
executor be required to pay an amount
equal to the executor’s “best estimate” of
the ultimate tax due and receive an auto-
matic extension of time to pay any excess.
The Treasury Department and the IRS be-
lieve that a standard incorporating an ex-
ecutor’s “best estimate” would be diffi-
cult to administer, and the suggestion has
not been adopted.
One commentator suggested that the
regulations provide the criteria to be used
in approving or denying requests for ex-
tensions of time to file that do not qualify
for the automatic 6-month extension.
This suggestion has not been adopted.
The Treasury Department and the IRS be-
lieve that the circumstances surrounding
requests for extensions of time to file that
do not qualify for the automatic 6-month
extension generally present factual issues
and questions warranting the broad dis-
cretion of the IRS office responsible for
granting or denying the extension of time.
Special Analysis
It has been determined that this Treasury
decision is not a significant regulatory ac-
tion as defined in Executive Order 12866.
Therefore, a regulatory assessment is not re-
quired. It also has been determined that sec-
tion 553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply and
because this rule does not impose a collec-
tion of information on small entities, the
Regulatory Flexibility Act (5 U.S.C. chapter
6) does not apply to these regulations, and
therefore, a Regulatory Flexibility Analysis
is not required. Pursuant to section 7805(f)
of the Internal Revenue Code, the notice of
proposed rulemaking preceding these regu-
lations was submitted to the Small Business
Administration for comment on their impact
on small business.
Drafting Information
The principal author of these regulations
is Mary Berman, Office of the Associate
Chief Counsel (Passthroughs and Special
Industries), IRS. However, other person-
nel from the IRS and Treasury Department
participated in their development.
* * * * *
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 20 and 602
are amended as follows:
PART 20—ESTATE TAX; ESTATES OF
DECEDENTS DYING AFTER
AUGUST 16, 1954
Paragraph 1. The authority citation for
part 20 is amended by adding an entry in
numerical order to read in part as follows:

2001–33 I.R.B.127August 13, 2001
Authority: 26 U.S.C. 7805 * * *
Section 20.6081–1 also issued under 26
U.S.C. 6081(a). * * *
Par. 2. Section 20.6075–1 is revised to
read as follows:
§20.6075–1 Returns; time for filing estate
tax return.
The estate tax return required by sec-
tion 6018 must be filed on or before the
due date. The due date is the date on or
before which the return is required to be
filed in accordance with the provisions of
section 6075(a) or the last day of the pe-
riod covered by an extension of time as
provided in §20.6081–1. The due date,
for a decedent dying after December 31,
1970, is, unless an extension of time for
filing has been obtained, the day of the
ninth calendar month after the decedent’s
death numerically corresponding to the
day of the calendar month on which
death occurred. However, if there is no
numerically corresponding day in the
ninth month, the last day of the ninth
month is the due date. For example, if
the decedent dies on July 31, 2000, the
estate tax return and tax payment must be
made on or before April 30, 2001. When
the due date falls on Saturday, Sunday, or
a legal holiday, the due date for filing the
return is the next succeeding day that is
not Saturday, Sunday, or a legal holiday.
For the definition of a legal holiday, see
section 7503 and §301.7503–1 of this
chapter. As to additions to the tax in the
case of failure to file the return or pay the
tax within the prescribed time, see sec-
tion 6651 and §301.6651–1 of this chap-
ter. For rules with respect to the right to
elect to have the property valued as of a
date or dates subsequent to the decedent’s
death, see section 2032 and §20.2032–1,
and section 7502 and §301.7502–1 of this
chapter. This section applies to estates of
decedents dying after August 16, 1954.
Par. 3. Section 20.6081–1 is revised to
read as follows:
§20.6081–1 Extension of time for filing
the return.
(a) Procedures for requesting an exten-
sion of time for filing the return. A re-
quest for an extension of time to file the
return required by section 6018 must be
made by filing Form 4768, “Application
for Extension of Time To File a Return
and/or Pay U. S. Estate (and Generation-
Skipping Transfer) Taxes.” Form 4768
must be filed with the Internal Revenue
Service office designated in the applica-
tion’s instructions (except as provided in
§301.6091–1(b) of this chapter for hand-
carried documents). Form 4768 must in-
clude an estimate of the amounts of estate
and generation-skipping transfer tax lia-
bilities with respect to the estate.
(b) Automatic extension. An estate
will be allowed an automatic 6-month ex-
tension of time beyond the date pre-
scribed in section 6075(a) to file Form
706, “United States Estate (and Genera-
tion-Skipping Transfer) Tax Return,” if
Form 4768 is filed on or before the due
date for filing Form 706 and in accor-
dance with the procedures under para-
graph (a) of this section.
(c)Extension for good cause shown. In
its discretion, the Internal Revenue Service
may, upon the showing of good and suffi-
cient cause, grant an extension of time to
file the return required by section 6018 in
certain situations. Such an extension may
be granted to an estate that did not request
an automatic extension of time to file Form
706 prior to the due date under paragraph
(b) of this section, to an estate or person
that is required to file forms other than
Form 706, or to an executor who is abroad
and is requesting an additional extension of
time to file Form 706 beyond the 6-month
automatic extension. Unless the executor is
abroad, the extension of time may not be
for more than 6 months beyond the filing
date prescribed in section 6075(a). To ob-
tain such an extension, Form 4768 must be
filed in accordance with the procedures
under paragraph (a) of this section and
must contain a detailed explanation of why
it is impossible or impractical to file a rea-
sonably complete return by the due date.
Form 4768 should be filed sufficiently
early to permit the Internal Revenue Ser-
vice time to consider the matter and reply
before what otherwise would be the due
date of the return. Failure to file Form
4768 before that due date may indicate neg-
ligence and constitute sufficient cause for
denial of the extension. If an estate did not
request an automatic extension of time to
file Form 706 under paragraph (b) of this
section, Form 4768 must also contain an
explanation showing good cause for not re-
questing the automatic extension.
(d) Filing the return. A return as
complete as possible must be filed be-
fore the expiration of the extension pe-
riod. The return thus filed will be the
return required by section 6018(a), and
any tax shown on the return will be the
amount determined by the executor as
the tax referred to in section 6161(a)(2),
or the amount shown as the tax by the
taxpayer upon the taxpayer’s return re-
ferred to in section 6211(a)(1)(A). The
return cannot be amended after the ex-
piration of the extension period al-
though supplemental information may
subsequently be filed that may result in
a finally determined tax different from
the amount shown as the tax on the re-
turn.
(e) Payment of the tax. An extension
of time for filing a return does not oper-
ate to extend the time for payment of the
tax. See §20.6151–1 for the time for
payment of the tax, and §§20.6161–1
and 20.6163–1 for extensions of time for
payment of the tax. If an extension of
time to file a return is obtained, but no
extension of time for payment of the tax
is granted, interest will be due on the tax
not paid by the due date and the estate
will be subject to all applicable late pay-
ment penalties.
(f) Effective date.This section applies
to estates of decedents dying after August
16, 1954, except for paragraph (b) of this
section which applies to estate tax returns
due after July 25, 2001.
PART 602—OMB CONTROL UNDER
THE PAPERWORK REDUCTION ACT
Par. 4. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 5. In §602.101, paragraph (b) is
amended by revising the entry for
20.6081–1 to read as follows:
§602.101 OMB Control numbers.
* * * * *
(b) * * *
CFR part or sectionCurrent OMB
where identifiedcontrol No.
and described
* * * * *
20.6081–1 . . . . . . . . . . . . . . . . .1545–0015
1545–0181
1545–1707
* * * * *

Robert E. Wenzel,
Deputy Commissioner
of Internal Revenue.
Approved July 17, 2001.
Mark Weinberger,
Assistant Secretary
of the Treasury.
(Filed by the Office of the Federal Register on July
24, 2001, 8:45 a.m., and published in the issue of the
Federal Register for July 25, 2001, 66 F.R. 38544)
August 13, 20011282001–33 I.R.B.

Basis Shifting Tax Shelter
Notice 2001–45
The Internal Revenue Service and the
Treasury Department have become aware
of a type of transaction, described below,
that is being used by taxpayers for the pur-
pose of generating losses or reducing in-
come or gains. This Notice alerts taxpay-
ers and their representatives that the tax
benefits purportedly generated by such
transactions are not properly allowable for
federal income tax purposes. This Notice
also alerts taxpayers, their representatives,
and promoters of such transactions of cer-
tain responsibilities that may arise from
participating in such transactions.
FACTS
The transaction involves the use of the
attribution rules of § 318 of the Internal
Revenue Code and § 1.302–2(c) of the In-
come Tax Regulations to increase the
basis of stock owned by a taxpayer (the
“Taxpayer”) that claims a loss upon dis-
position of that stock. In the transaction,
there is a redemption of stock that is
owned by a person (other than the Tax-
payer) that is not subject to U.S. tax or is
otherwise indifferent to the Federal in-
come tax consequences of the redemp-
tion. Purportedly as a result of the appli-
cation of the attribution rules of § 318, the
redemption of stock is claimed to be a
dividend under § 301 rather than a pay-
ment in exchange for stock under
§ 302(a). A variety of devices, often in-
cluding options, is employed to treat the
redeemed shareholder as owning stock in
the redeeming corporation owned or
treated as owned by the Taxpayer under
the attribution rules of § 318. The attribu-
tion of ownership of such shares purport-
edly prevents the redemption of stock
from reducing the redeemed share-
holder’s ownership interest in the redeem-
ing corporation, thereby causing the re-
demption to be treated as a dividend.
As a result of the redemption, the Tax-
payer takes the position that under
§ 1.302–2(c) all or a portion of the basis of
the redeemed stock is added to the basis of
stock in the redeeming corporation that the
Taxpayer owns. The Taxpayer then sells
the stock and claims a loss.
Variations on the transaction include
(1) the use of the transaction to reduce in-
come or gain (rather than generate loss)
and (2) the transfer of the stock (the basis
of which was purportedly increased by
reason of the redemption) to an entity in a
carryover basis exchange, followed by ei-
ther a sale of the entity interest or a sale of
the stock by the entity.
ANALYSIS
Section 302(a) provides that if a corpo-
ration redeems its stock and § 302(b)(1),
(2), (3), or (4) applies, such redemption
shall be treated as a distribution in part or
full payment in exchange for the re-
deemed stock. Under § 302(b)(1), a re-
demption distribution will be subject to
§ 302(a) if, based on the facts and circum-
stances, the redemption distribution is not
essentially equivalent to a dividend. See
§ 1.302–2(b). Section 302(b)(2) provides
that a distribution in redemption of stock
will be subject to § 302(a) if the distribu-
tion is substantially disproportionate with
respect to the redeeming shareholder.
Under § 302(b)(3), § 302(a) will apply to
a distribution in redemption of stock if the
redemption is in complete redemption of
all of the stock of the corporation owned
by the redeeming shareholder.
For purposes of determining whether a
distribution in redemption of stock is
treated as a sale or exchange of stock, all
steps that are part of a single,
pre–arranged plan are taken into account.
See Zenz v. Quinlivan, 213 F.2d 914 (6th
Cir. 1954). Section 302(d) provides that
if § 302(a) does not apply, the distribution
will be treated as a distribution subject to
§ 301. Section 302(c)(1) provides that, in
determining whether the provisions of
§ 302(b) are satisfied, the attribution rules
of § 318 shall apply. Section 301(c)(1)
provides that the portion of the distribu-
tion that is a dividend shall be included in
the redeemed shareholder’s gross income.
Section 1.302–2(c) provides that when
an amount received in a redemption of
stock is treated as a distribution of a divi-
dend, “proper adjustment” of the basis of
the remaining stock will be made with re-
spect to the stock redeemed. Example 2
of § 1.302–2(c) illustrates a proper adjust-
ment where the entire amount received in
redemption of the stock held by one
spouse is treated as a dividend because
the redeemed spouse is treated as owning
stock held by the other spouse. In that ex-
ample, the basis of the stock of the nonre-
deemed spouse is properly increased by
the basis of the stock of the redeemed
spouse.
It is the position of the Service and the
Treasury that such an adjustment is not
proper in every case in which the re-
deemed shareholder retains no stock in
the redeeming corporation. The example
in the regulations is premised on the con-
cept that an adjustment is appropriate
where the redeemed spouse is required to
include the full redemption proceeds as a
dividend in gross income that is subject to
U.S. tax and such spouse retains no stock
to which the basis of the redeemed stock
could attach.
The Service intends to disallow losses
claimed (or to increase taxable income or
gains) in the transactions described in this
Notice to the extent a taxpayer derives a
tax benefit that is attributable to stock
basis purportedly shifted from the re-
deemed shares. Depending on the facts of
the particular case, reasons for disal-
lowance may include, but are not limited
to, the following: (1) the redemption does
not result in a dividend (and consequently
there is no basis shift) because, viewing
the transaction as a whole, the redemption
results in a reduction of interest in the re-
deeming corporation to which § 302(b)
applies; (2) the basis shift is not a “proper
adjustment” as contemplated by
§ 1.302–2(c); and (3) there is no attribu-
tion of stock ownership or basis shift be-
cause the steps taken to achieve those re-
sults are transitory and serve no purpose
other than tax avoidance.
In addition, the Service may impose
penalties on participants in these transac-
tions, or, as applicable, on persons who
participate in the promotion or reporting
of these transactions, including the accu-
racy-related penalty under § 6662, the re-
turn preparer penalty under § 6694, the
promoter penalty under § 6700, and the
aiding and abetting penalty under § 6701.
Transactions that are the same as, or
substantially similar to, those described in
this Notice are identified as “listed trans-
actions” for purposes of § 1.6011–4T
2001–33 I.R.B.129August 13, 2001
Part III. Administrative, Procedural, and Miscellaneous

(b)(2) of the Temporary Income Tax Reg-
ulations and § 301.6111–2T(b)(2) of the
Temporary Procedure and Administration
Regulations. See also§ 301.6112–1T,
A–4. It should be noted that, independent
of their classification as “listed transac-
tions” for purposes of §§ 1.6011–4T(b)(2)
and 301.6111–2T(b)(2), such transactions
may already be subject to the tax shelter
registration and list maintenance require-
ments of §§ 6111 and 6112 under the reg-
ulations issued in February 2000
(§§ 301.6111–2T and 301.6112–1T, A–4),
as well as the regulations issued in 1984
and amended in 1986 (§§ 301.6111–1T
and 301.6112–1T, A–3). Persons required
to register these tax shelters who have
failed to register the shelters may be sub-
ject to the penalty under § 6707(a), and to
the penalty under § 6708(a) if the require-
ments of § 6112 are not satisfied.
The Service and Treasury recognize
that some taxpayers may have filed tax re-
turns taking the position that they were
entitled to the purported tax benefits of
the type of transaction described in this
Notice. We advise these taxpayers to take
prompt action to file amended returns.
The principal authors of this Notice are
Theresa Abell and Lisa Leong of the Of-
fice of Associate Chief Counsel (Corpo-
rate). For further information regarding
this Notice, contact Ms. Abell at (202)
622-7700 or Ms. Leong at (202) 622-
7530 (not toll-free calls).
Weighted Average Interest Rate
Update
Notice 2001–48
Notice 88–73 provides guidelines for
determining the weighted average interest
rate and the resulting permissible range of
interest rates used to calculate current lia-
bility for the purpose of the full funding
limitation of § 412(c)(7) of the Internal
Revenue Code as amended by the Om-
nibus Budget Reconciliation Act of 1987
and as further amended by the Uruguay
Round Agreements Act, Pub. L. 103–465
(GATT).
The average yield on the 30-year Trea-
sury Constant Maturities for June 2001 is
5.67 percent.
The following rates were determined
for the plan years beginning in the month
shown below.
August 13, 20011302001–33 I.R.B.
90% to 105%90% to 110%
WeightedPermissible Permissible
MonthYearAverageRangeRange
July20015.805.22 to 6.095.22 to 6.38
Drafting Information
The principal author of this notice is
Todd Newman of the Employee Plans,
Tax Exempt and Government Entities Di-
vision. For further information regarding
this notice, please call Mr. Newman at
(202) 283-9702 (not a toll-free number).
NOTE:
Following is a list of related instructions and forms for filing Form 1042–S Magnetically/Electronically:
• 2001 Instructions for Form 1042–S
• Form 4419 – Application for Filing Information Returns Magnetically/Electronically
• Form 4804 – Transmittal of Information Returns Reported Magnetically
• Form 8508 – Request for Waiver From Filing Information Returns on Magnetic Media (Forms W-2, W-2G, 1042–S, 1098,
1099, 5498, and 8027)
• Form 8809 – Request for Extension of Time To File Information Returns (Forms W-2, W-2G, 1042–S, 1098, 1099, 5498, and
8027)
• Notice 210 – Preparation Instructions for Media Labels
• Publication 515 – Withholding of Tax on Nonresident Aliens and Foreign Corporations (for general information and expla-
nation of tax law associated with Form 1042–S)
• Publication 901 – U.S. Tax Treaties
The Internal Revenue Service, Martinsburg Computing Center, encourages filers to make copies of the blank forms in the back of
this publication for future use. These forms can also be obtained by calling 1-800-TAX-FORM (1-800-829-3676). You can also
download forms and publications from the IRS Web Site at www.irs.gov.

Rev. Proc. 2001–40
Use this Revenue Procedure to prepare Tax Year 2001 and prior year information returns for submission to Internal Revenue Ser-
vice (IRS) using any of the following:
– Magnetic Tape
– Tape Cartridge
– 8mm, 4mm, and Quarter Inch Cartridges (QIC)
– 3 1/2-Inch Diskette
– Electronic Filing
Attention! Important Notice:
FORM1042–S PROCESSING ANDPUBLICATION1187 HAVE UNDERGONE MAJOR REVISIONS
. THE RECORD FORMAT AND
PROCESSING PROCEDURES ARE VERY DIFFERENT FROM PREVIOUS YEARS
. PLEASE READ THIS ENTIRE PUBLICATION CARE
-
FULLY.Persons or businesses required to file Form 1042–S magnetically or electronically may be subject to penalties
for failure to file or include correct information 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 - Current Year (Tax Year 2001)
Section 3.Where to File and How to Contact the IRS, Martinsburg Computing Center
Section 4.Filing Requirements
Section 5.Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media
Section 6.Vendor List
Section 7.Form 4419, Application for Filing Information Returns Magnetically/Electronically
Section 8.Test Files
Section 9.Filing of Information Returns Magnetically and Retention Requirements
Section 10.Due Dates
Section 11.Extensions of Time
Section 12.Processing of Information Returns Magnetically at IRS/MCC
Section 13.Validation of Information Returns at IRS Service Center
Section 14.Voided and Corrected Returns
Section 15.Taxpayer Identification Number (TIN)
Section 16.Effect on Paper Returns and Statements to Recipients
Section 17.Definition of Terms
Section 18.State Abbreviations
Part B. Magnetic Media Specifications
Section 1.General
Section 2.Tape Specifications
Section 3.Tape Cartridge Specifications
Section 4.8mm, 4mm, and Quarter-Inch Cartridge Specifications
Section 5.3 1/2-Inch Diskette Specifications
Section 6.Transmitter “T” Record
Section 7.Withholding Agent “W” Record
Section 8.Recipient “Q” Record
Section 9.Reconciliation “C” Record
Section 10.End of Transmission “F” Record
Part C. Electronic Filing Specifications
Section 1.Background
Section 2.Advantages of Filing Electronically
Section 3.General
Section 4.Electronic Filing Approval Procedure
Section 5.Test Files
Section 6. Electronic Submissions
2001–33 I.R.B.131August 13, 2001

August 13, 20011322001–33 I.R.B.
Section 7.PIN Requirements
Section 8.Electronic Filing Specifications
Section 9. Dial-up Network/Browser Specifications (Web Interface)
Section 10.Communication Software Specifications (Text Interface)
Section 11. Modem Configuration
Section 12. Common Problems Associated with Electronic Filing
Part D. Magnetic/Electronic Specifications for Extensions of Time
Section 1.General
Section 2.Magnetic Tape, Tape Cartridge, 8mm, 4mm, and QIC (Quarter Inch Cartridge), 3 1/2-inch Diskette, and Electronic
Specifications
Section 3.Record Layout – Extension of Time
Part E. Miscellaneous Information
Section 1. Addresses for Martinsburg Computing Center
Section 2. Telephone Numbers for Contacting IRS
Part A. General
Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue
Procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Martinsburg Computing Center
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
Sec. 1. Purpose
.01The purpose of this Revenue Procedure is to provide the specifications for filing Form 1042–S magnetically or electronically,
using 1/2-inch 9-track tape, IBM 3480, 3490, 3490E, 3590, 3590Eor AS400 compatible tape cartridges (including 4mm, 8mm &
QIC), or 3 1/2-inch diskette with IRS. IRS/MCC has discontinued processing 8-inch and 5 1/4-inch diskettes and the main-
frame electronic filing system. In addition, IRS/MCC will no longer process 1/2-inch 9-track magnetic tape beginning in cal-
endar year 2003 for tax year 2002. The previously used IRP-BBS (Bulletin Board System) has also been replaced. The new
electronic filing system is known as FIRE (Filing Information Returns Electronically). When using the Revenue Procedure for filing
prior year returns, reformat required information from prior years to fit the updated specifications. This Revenue Procedure must be
used to prepare current and prior year information returns filed beginning January 1, 2002, and received by IRS/MCC or post-
marked by December 31, 2002.
.02Generally, the box numbers on the paper Form 1042–S correspond with the fields used to file magnetically/electronically;
however, if discrepancies occur, the instructions in this Revenue Procedure govern.
.03 This Revenue Procedure supersedes Rev. Proc. 98–44 published as Publication 1187, Specifications for Filing Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding, Magnetically or Electronically.
.04Refer to Part A, Sec. 17, for definitions of terms used in this publication.
.05Specifications for filing Forms W-2, Wage and Tax Statements, magnetically/electronically are available from the Social Se-
curity Administration (SSA) only. Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Service Liai-
son Officer for their area.
.06IRS/MCC does notprocess Forms W-2. Paper and/ormagnetic media for Forms W-2 must be sent to SSA. IRS/MCC does,
however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W-2 and requests for an
extension of time to provide the employee copies of Forms W-2.
.07The following Revenue Procedures and publications provide more detailed filing procedures for certain information returns:
(a)2001 Instructions for Form 1042–S.
(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, 1042–S, 5498, and
W–2G.
(d)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allo-
cated Tips, Magnetically or Electronically.
(e)Publication 1220 (Rev. 7–2001), Specifications for Filing Forms 1098, 1099, 5498, and W-2G, Magnetically or Electronically.

(f)Publication 1245, Specifications for Filing Form W-4, Employee’s Withholding Allowance Certificate, Magnetically or
Electronically.
Sec. 2. Nature of Changes—Current Year (Tax Year 2001)
.01 Due to the issuance of final regulations to Internal Revenue Code (IRC) Section 1441, effective January 1, 2001, this
publication is completely revised for Tax Year2001.Because of this comprehensive revision, changes are not emphasized by
the use of italics as in the past. Major changes are listed below, however, filers must read the publication in its entirety for
Form 1042–S to be filed correctly, magnetically or electronically.
.02 IRS/MCC will no longer return problem media in need of replacement. See Part A, Sec. 12. Filers will receive Form 9267,
Media Tracking Slip, a listing of errors, and a letter detailing the problem(s) encountered during processing. Filers will be expected
to send replacement media within the prescribed time frame. This makes it imperativethat filers maintain backup copies and/or
recreate capabilities for their information return files. All references to returning media for replacement were deleted.
.03Major changes were implemented for the processing of Form 1042–S. See Part A, Sec.12.03 for a complete listing of errors
that will result in a request for a replacement file.
.04 Validity, consistency, and related math error checks within individual “Q” Records will no longer be conducted as part of
IRS/MCC’s processing. This processing will be performed by the IRS Service Center. See Part A, Sec. 13.
.05The guidelines for corrected returns have been updated to reflect record and format changes. See Part A, Sec. 14.
.06 Beginning in calendar year 2003 for Tax Year 2002, IRS/MCC will no longer accept 9-track tape for filing Form 1042–S. See
Part B, Sec. 2, Tape Specifications.
.07The record layout and record sequence have changed. A Reconciliation “C” Record was added, and the End of Transmission
“F” Record has replaced the “Y” Record. A file will consist of records in the following sequence:
Transmitter “T” Record,
Withholding Agent “W” Record,
Recipient “Q” Record(s),
Reconciliation “C” Record, and
End of Transmission “F” Record.
Multiple sets of the Withholding Agent “W” Record, the Recipient “Q” Record(s), and the Reconciliation “C” Record may be in-
cluded within the file in that sequence. However, the file must contain only one Transmitter “T” Record (at the beginning of the file)
and one End of Transmission “F” Record (at the end of the file). The record length has changed to 780 fixed positions. Block size
must not exceed 23,400 tape positions. See Part B.
.08A Reconciliation “C” Record has been added to summarize the number of “Q” Records and income amounts reported in the
Recipient “Q” Records for a specific Withholding Agent “W” Record. See Part B, Reconciliation “C” Record.
.09The final record on a file has been changed to End of Transmission “F” Record. See Part B, End of Transmission “F” Record.
.10 Filers mustread the record format for each type of record very carefully. There have been numerous changes, additions, and
deletions to the elements in each record.
Sec. 3. Where To File and How to Contact the IRS, Martinsburg Computing Center
.01 All information returns filed magnetically or electronically are processed at IRS/MCC. Files containing information returns
and requests for IRS magnetic media and electronic filing information should be sent to the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
.02 Allrequests for an extension of time to file information returns with IRS/MCC or to the recipients, and requests for undue
hardship waivers filed on Form 8508, should be sent to the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03 The telephone numbers for magnetic media inquiries or electronic submissions are:
&
304-263-8700 - Call Site oremail at mccirp@irs.gov
304-267-3367 - TDD (Telecommunication Device for the Deaf)
2001–33 I.R.B.133August 13, 2001

304-264-5602 - Fax Machine
Electronic Filing – FIRE System
304-262-2400
********(These ar
e not toll-free telephone numbers.)********
TO OBTAIN FORMS:
1-800-TAX-FORM (1-800-829-3676)
www.irs.gov– IRS Web Site access to forms
.04 The 2001 Instructions for Form 1042–S have been included in the Publication 1187 for your convenience. The Form 1042–T
is used only to transmit Copy A of paperForm 1042–S. If filing paper returns, follow the mailing instructions on Form 1042–T and
submit the paper returns to the Internal Revenue Service Center, Philadelphia, PA 19255.
.05 Requests for paper Form 1042–S and publications related to magnetic media/electronic filing should be made by calling the
IRS toll-free number 1-800-TAX-FORM (1-800-829-3676) or via the IRS Web Site atwww.irs.gov.
.06 Questions pertaining to magnetic media filing of Forms W-2 mustbe directed to the Social Security Administration (SSA).
Filers can call 1-800-SSA-6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.
.07 Filers should notcontact IRS/MCC if they have received a penalty notice and need additional information or are requesting
an abatement of the penalty. A penalty notice contains an IRS representative’s name and/or phone number for contact purposes; or,
the filer may be instructed to respond in writing to the address provided. IRS/MCC does notissue penalty notices and does nothave
the authority to abate penalties. For penalty information, refer to the Penalty section of the 2001 Instructions for Form 1042–S.
.08A taxpayer or authorized representative may request a copy of a tax return, including Form W-2 filed with a return, by sub-
mitting Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling 1-800-TAX-FORM
(1-800-829-3676). For any questions regarding this form, call 1-800-829-1040.
.09The Information Reporting Program Call Site answers both magnetic media and tax law questions relating to the filing of infor-
mation returns (Forms 1096, 1098, 1099, 5498, 8027, W-2G, and W-4). The Call Site also answers magnetic media questions related to
Form 1042–S as well as tax law and paper filing related questions about Forms W-2 and W-3. They also handle inquiries dealing with
backup withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers. The Call Site is
located at IRS/MCC and operates in conjunction with the Information Reporting Program. The Call Site provides service to the payer
community (financial institutions, employers, and other transmitters of information returns). 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 on their tax returns. The Call Site accepts calls from all areas of the country. The number to call is304-263-8700or
Telecommunications Device for the Deaf (TDD) 304-267-3367.These are not toll-free numbers. You can also reach the Call Site via
email at mccirp@irs.gov
. 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 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.
*Note: This call site does not answer tax law questions concerning the requirements for withholding of tax on payments of
U.S. source income to foreign persons under Chapter 3 of the Code. If you need such assistance, you may call
215-516-2000 (not a toll-free number) or write to: Philadelphia Internal Revenue Service, International Section,
P.O. Box 920, Bensalem, PA 19020-8518.
Sec. 4. Filing Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file 250 or more information returns must file such returns magneti-
cally/electronically. Withholding agents who meet the threshold of 250 or more Forms1042–S are required to submit their informa-
tion electronically or magnetically.
*Note: Even though filers with less than 250 information returns are not required to submit the information returns mag-
netically or electronically and may submit them on paper, IRS encourages filers to transmit those information
returns magnetically or electronically.
.02 These requirements apply separately to both originals and corrections filed magnetically/electronically.
.03 All filing requirements that follow apply individually to each reporting entity as defined by its separate taxpayer identification
number (TIN) [social security number (SSN), employer identification number (EIN), IRS individual taxpayer identification number
(ITIN), or Qualified Intermediary Employer Identification Number (QI-EIN)]. For example, if a corporation with several branches
or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN and apply the fil-
ing requirements to each type of return accordingly.
August 13, 20011342001–33 I.R.B.

.04Filers who are required to submit their information returns on magnetic media may choose to submit their documents by elec-
tronic filing. IRS/MCC has one method for filing information returns electronically; see Part C.
.05 The above requirements do not apply if the filer establishes hardship (see Part A, Sec. 5).
Sec. 5. Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media
.01 If a filer 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 filer will be subject to a penalty of $50 per return in excess of 250. For penalty
information, refer to the Penalty section of the 2001 Instructions for Form 1042–S.
.02If filers 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.
.03Even though a filer may submit as many as 249 corrections on paper, IRS encourages magnetically or electronically submit-
ted corrections. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more magnetically or elec-
tronically. However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered
under this waiver.
.04Generally, only the withholding agent may sign the Form 8508. A transmitter may sign if given power of attorney; however,
a letter signed by the withholding agent stating this fact must be attached to the Form 8508.
.05 A transmitter must submit a separate Form 8508 for each withholding agent. Do not submit a list of withholding agents.
.06All 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. Withholding agents
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.
.08Form 8508 may be photocopied or computer-generated as long as it contains all the information requested on the original
form.
.09Filers are encouraged to submit Form 8508 to IRS/MCC at least 45 days before the due date of the returns.
.10File Form 8508 for the W-2 series of forms with IRS/MCC, not SSA.
.11Waivers are evaluated on a case-by-case basis and are approved or denied based on criteria set forth in the regulations under
section 6011(e) of the Internal Revenue Code. The transmitter must allow a minimum of 30 days for IRS/MCC to respond to a
waiver request.
.12If a waiver request is approved, the transmitter should keep the approval letter on file. The transmitter should not send a copy
of the approved waiver to the service center where the paper returns are filed.
.13An approved waiver from filing information returns on magnetic media does not provide exemption from all filing. The with-
holding agent must timely file Form 1042–S on acceptable paper forms with the Philadelphia Service Center.
Sec. 6. Vendor List
.01IRS/MCC prepares a list of vendors who support magnetic media or electronic filing. The Vendor List (Pub. 1582) contains
the names of service bureaus that will produce files on the prescribed types of magnetic media or via electronic filing. It also con-
tains the names of vendors who provide software packages for filers who wish to produce magnetic media or electronic files on their
own computer systems. This list is compiled as a courtesy and in no way implies IRS/MCC approval or endorsement.
.02 If filers meeting the filing requirements engage a service bureau to prepare media on their behalf, the filers should be careful
not to report duplicate data, which may cause penalty notices to be generated.
.03The Vendor List, Publication 1582, may be updated in print every other year. The most recently printed copy will be available
by contacting IRS/MCC at 304-263-8700 or by letter (see Part A, Sec. 3). The Vendor List is also available on the IRS Web Site at
www.irs.gov.
.04A vendor who offers a software package, has the ability to produce magnetic media for customers, or has the capability to
electronically file information returns, and would like to be included on the list, must submit a written request to IRS/MCC. The re-
quest should include:
(a)Company name,
(b)Address (include city, state, and ZIP code),
(c)Telephone number (include area code),
(d)Contact person,
(e)Type(s) of service provided (e.g., service bureau and/or software),
(f) Type(s) of media offered (e.g., magnetic tape, tape cartridge, 3 1/2-inch diskette, or electronic filing),
(g)Type(s) of return(s).
Sec. 7. Form 4419, Application for Filing Information Returns Magnetically/Electronically
.01Transmitters are required to submit Form 4419, Application for Filing Information Returns Magnetically/Electronically, to re-
quest authorization to file information returns with IRS/MCC. A single Form 4419 may be filed.
2001–33 I.R.B.135August 13, 2001

August 13, 20011362001–33 I.R.B.
EXCEPTIONS
An additional Form 4419 is required for filing each of the following types of returns:
Forms 1098, 1099, 5498, W-2G, 8027, and Questionable W-4.
FORMTITLEEXPLANATION
1098, 1099, 5498 Various types of Payments subject to
W-2Ginformation returnsreporting requirements
under Code Section
6011(e)(2)(A), including
interest, dividends, royalties,
pensions and annuities,
gambling winnings, and
compensation for personal
services.
8027 Employer’s AnnualReceipts from operations
Information Returnwhere tipping is customary.
of Tip Income andUsed by employers to
Allocated Tipsreport employees’ tips or
allocated tips.
Questionable W-4Employee’s WithholdingForms received during the
(See Note) Allowance Certificatequarter from employees
still employed at the end
of the quarter who claim
(a)More than 10
withholding
allowances, or
(b)Exempt status and
wages normally
would be more than
$200 a week.
*Note: Employers are not required to send other Forms W-4 unless notified to do so by the IRS.
.02Magnetic tape, tape cartridge, diskette, and electronically-filed returns may not be submitted to IRS/MCC until the applica-
tion has been approved. Please read the instructions on the back of Form 4419 carefully. A Form 4419 is included in the Publication
1187 for the filer’s use. This form may be photocopied. Additional forms may be obtained by calling 1-800-TAX-FORM (1-800-
829-3676). The form is also available on the IRS Web Site atwww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) beginning with the digits “22”will be as-
signed and included in an approval letter. The TCC mustbe coded in the Transmitter “T” Record. If a transmitter uses more than
one TCC to file, each TCC must be reported on separate media or in separate transmissions if filing electronically. Please make sure
you submit your magnetic media files using the correct TCC.
.04 When revisions occur, a Publication 1187 containing the current Revenue Procedure, forms, and instructions will be sent to
the attention of the contact person indicated on Form 4419.
.05 If anyof the information (name, TIN, or address) on the Form 4419 changes, please notify IRS/MCC in writing so the
IRS/MCC database can be updated. However, a change in the method by which information returns are being submitted is not in-
formation which needs to be updated (e.g., tape to disk). The transmitter should include the TCC in all correspondence.
.06Form 4419 may be submitted anytime during the year; however, it must be submitted to IRS/MCC at least 30 days before
the due date of the return(s) for current year processing. This will allow IRS/MCC the minimum amount of time necessary to process
and respond to applications. In the event that computer equipment or software is not compatible with IRS/MCC, a waiver may be
requested to file returns on paper documents.
.07IRS/MCC encourages transmitters who file for multiple withholding agents to submit one application and to use the assigned
TCC for all withholding agents.
.08If a withholding agent’s files are prepared by a service bureau, the withholding agent may not need to submit an application to
obtain a TCC. Some service bureaus will produce files, code their own TCC on the media, and send it to IRS/MCC for the with-
holding agent. Other service bureaus will prepare magnetic media and return the media to the withholding agent for submission to
IRS/MCC. These service bureaus may require the withholding agent to obtain a TCC to be coded in the Transmitter “T” Record.
Withholding agents should contact their service bureaus for further information.

.09Once a transmitter is approved to file magnetically or electronically, it is not necessary to reapply each year unless:
(a)The withholding agent has discontinued filing magnetically or electronically for two consecutive years; the withholding
agent’s TCC may have been reassigned by IRS/MCC. Withholding agents who are aware that the TCC assigned will no
longer be used are requested to notify IRS/MCC so these numbers may be reassigned; or
(b)The withholding agent’s magnetic media files were transmitted in the past by a service bureau using the service bureau’s
TCC, but now the withholding agent has computer equipment compatible with that of IRS/MCC and wishes to prepare his
or her own files. The withholding agent must request a TCC by filing Form 4419.
.10One Form 4419 may be submitted regardless of how many types of media or methods are used to file the return. Multiple
TCCs will only be issued to withholding agents with multiple TINs. Only one TCC will be issued per TIN unless the filer has
checked the application for the following forms in addition to the Form 1042–S: Forms 1098, 1099, 5498, W-2G, 8027, and/or W-4.
A separate TCC will be assigned for these forms.
.11Approval to file does not imply endorsement by IRS/MCC of any computer software or of the quality of tax preparation ser-
vices provided by a service bureau or software vendor.
Sec. 8. Test Files
.01IRS/MCC strongly encourages all magnetic media or electronic filers to submit a test for 2001. The test file must consist of a
sample of each type of record:
(a) Transmitter “T” Record
(b) Withholding Agent “W” Record
(c)Multiple Recipient “Q” Records (at least 20)
(d)Reconciliation “C” Record
(e)End of Transmission “F” Record
.02Use the Test Indicator “TEST” (upper case) in Field Positions 195–198 of the “T” Record to show this is a test file.
.03IRS/MCC will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending a test
file will provide the opportunity to ensure their software reflects all programming changes required for TY2001.
.04Tests should be sent to IRS/MCC between December 1, 2001, and February 15, 2002. Tests must be received at MCC by Feb-
ruary 15, 2002, in order to be processed.
.05For tests filed on magnetic tape, tape cartridge, 8mm, 4mm, and quarter inch cartridge,and 3 1/2-inch diskette, the transmitter
must include the signed Form 4804 in the same package with the corresponding magnetic media. Mark the “TEST” box in Block 1
on the form. Also, mark “TEST” on the external media label.
.06IRS/MCC will send a letter of acknowledgment to indicate the test results for magnetic media with documentation identifying
the fatal errors. Resubmission of magnetic media test files must be received by IRS/MCC no later than February 15. See Part C,
Sec. 5.03, for information on electronic test results.
.07Magnetic media will not be returned to filers.
*Note: Validity, consistency, and related math error checks within individual “Q” Records will no longer be conducted as
part of MCC’s testing procedures.
Sec. 9. Filing of Information Returns Magnetically and Retention Requirements
.01Form 4804, Transmittal of Information Returns Reported Magnetically, or a computer-generated substitute, must accompany
allmagnetic media shipments.
.02IRS/MCC allows for the use of computer-generated substitutes for Form 4804. The substitutes must contain all information
requested on the original forms including the affidavit and signature line. Photocopies are acceptable but an original signature is re-
quired. When using computer-generated forms, be sure to mark very clearly which tax year is being reported. This will eliminate a
phone communication from IRS/MCC to question the tax year.
.03 Multiple types of media may be submitted in a shipment. However, submit a separate Form 4804 for each type of media.
.04Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media, and a
separate Form 4804 must be prepared to clearly indicate each tax year.
.05Filers who have prepared their information returns in advance of the due date are encouraged to submit this information to
IRS/MCC no earlier than January 1 of the year the return is due.
.06Do not report duplicate information. If a filer submits returns magnetically/electronically, identical paper documents must not
be filed. This may result in erroneous penalty notices.
.07Form 4804 may be signed by the withholding agent or the transmitter, service bureau, paying agent, or disbursing agent (all hereafter
referred to as agent) on behalf of the payer. Failure to sign the affidavit on Form 4804 may delay processing or could result in IRS/MCC re-
questing a replacement file. An agent may sign the Form 4804 if the agent has the authority to sign the affidavit under an agency agreement
(either oral, written, or implied) that is valid under state law and adds the caption “FOR: (name of withholding agent/payer).”
.08Although an authorized agent may sign the affidavit, the withholding agent is responsible for the accuracy of the Form 4804
and the returns filed. The withholding agent will be liable for penalties for failure to comply with filing requirements.
2001–33 I.R.B.137August 13, 2001

.09A self-adhesive external media label, created by the filer, must be affixed to each piece of magnetic media. For instructions on
how to prepare an external media label, refer to Notice 210 in the forms section of this publication.
.10On the outside of the shipping container, affix or attach a label which reads “IRB Box ___of___” reflecting the number of
containers in the shipment. (Filers can create a label with this information or cut out one of the labels on the special label page pro-
vided in this publication.) If there is only one container, mark the outside as Box 1 of 1. For multiple containers, include the se-
quence (for example, Box 1 of 3, 2 of 3, 3 of 3).
.11When submitting magnetic files include the following:
(a) AsignedForm 4804;
(b) External media label (created by filer) affixed to magnetic media;
(c)IRB Box _____ of ______ outside label.
.12 IRS/MCC will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an individual
or organization is legally required to submit.
.13Withholding agents should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for
at least 3 years from the due date of the returns. Whenever backup withholding is imposed, a 4-year retention is required.
Sec. 10. Due Dates
.01The due dates for filing paper returns with IRS also apply to magnetic media. Filing of Form 1042–S is on a calendar year
basis.
.02Form 1042–S filed magnetically must be submitted to IRS/MCC postmarked on or before March 15.
.03If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed or furnished
on the next day that is not a Saturday, Sunday, or legal holiday.
.04Magnetic media returns postmarked by the United States Postal Service (USPS) on or before March 15, and delivered by
United States mail to IRS/MCC after the due date, are treated as timely under the “timely mailing as timely filing” rule. Notice
97–26, 1997–1 C.B. 413, provides rules for determining the date that is treated as the postmark date. A similar rule applies to items
delivered by private delivery services (PDSs) designated by the IRS. A PDS must be designated by the IRS before it will qualify for
the timely mailing rule. (See Note.) Notice 99–41, 1999–2 C.B. 325, provides the list of designated PDSs. Designation is effective
until the IRS issues a revised list. For items delivered by a non-designated PDS, the actual date of receipt by IRS/MCC will be used
as the filing date. For items delivered by a designated PDS, but through a type of service not designated in Notice 99–41, the actual
date of receipt by IRS/MCC will be used as the filing date.
*Note: Due to security regulations at MCC, the Internal Revenue police officers will not accept media from PDSs or
couriers from 3:00 p.m. to 11:00 p.m., seven days a week, and 11:00 p.m. to 7:00 a.m., Saturday and Sunday.
.05 Statements to recipients must be mailed on or before March 15.
Sec. 11. Extensions of Time
.01An extension of time to file may be requested for Form 1042–S.
.02Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC at the address
listed in .06 of this section. This form may be used to request an extension of time to file information returns submitted on paper,
magnetically or electronically.
.03Requesting an extension of time for multiple withholding agents (50 or less) may be done by submitting Form 8809 and at-
taching a list of the withholding agent’s names and associated EIN or QI-EIN, if applicable. The listing must be attached to ensure
an extension is recorded for all withholding agents. Form 8809 may be computer-generated or photocopied. Be sure that all the per-
tinent information is included.
.04Requests for an extension of time to file for more than 50 withholding agents must be submitted magnetically or electronically.
Transmitters requesting an extension of time for 10 to 50 withholding agents are encouraged to file magnetically or electronically. The
request may be filed on tape, tape cartridge, 3 1/2-inch diskette, or electronically. (See Part D, Sec. 3, for the record format.)
.05If a filer does not have an IRS/MCC assigned Transmitter Control Code (TCC), a Form 4419, Application for Filing Informa-
tion Returns Magnetically/Electronically, mustbe submitted to obtain a TCC. The TCC must be used to submit an extension request
magnetically/electronically.
.06All requests for an extension of time filed on Form 8809 or filed magnetically on tape, tape cartridge, or 3 1/2-inch diskette
should be sent using the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
August 13, 20011382001–33 I.R.B.

.07Requests for extensions of time for multiple withholding agents will be responded to with one approval letter, accompanied
by a list of withholding agents covered under that approval.
.08Transmitters should submit Form 8809 as soon as it is apparent that a 30-day extension is needed. It will take a minimum of
30 days for IRS/MCC to respond to an extension request. Under certain circumstances, a request for an extension of time could be
denied. When a denial letter is received, any additional or necessary information may be resubmitted within 20 days.
.09Form 8809 must be postmarked 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; however, 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 1099–INT and 1042–S, submit Form 8809 post-
marked on or before February 28.
.10If an additional extension of time is needed, a second Form 8809 must be filed by the initial extended due date. Check line 7
on the form to indicate that an additional extension is being requested. A second 30-day extension will be approved only in cases of
extreme hardship or catastrophic event. If requesting a second 30-day extension of time, submit the information return files as
soon as prepared. Do not wait for MCC’s response to your second extension request.
.11If an extension request is approved, the approval letter should be kept on file. The approval letter or copy of the approval let-
ter for an extension of time should not be sent to IRS/MCC with the magnetic media file or to the service center where the paper re-
turns are filed.
.12Request an extension for only the current tax year.
.13The extension request must be signed by the withholding agent or a person who is duly authorized to sign a return, statement,
or other document for the withholding agent.
.14Failure 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.
.15Form 8809 may be obtained by calling 1-800-TAX-FORM (1-800-829-3676).The form is also available on the IRS Web
Site at www.irs.gov. A copy of the Form 8809 is also provided in the back of Publication 1187.
.16 Request an extension of time to furnish the statements to recipients of Form 1042–S by submitting a letter to IRS/MCC at the
address listed in .06 of this section. The letter should contain the following information:
(a)Withholding Agent name,
(b)TIN,
(c)Address,
(d)Type of return,
(e)Specify that the extension request is to provide statements to recipients,
(f)Reason for delay, and
(g)Signature of withholding agent or person duly authorized.
Requests for an extension of time to furnish the statements to recipients for Forms 1042–S, 1098, 1099, 5498, W-2G, and W-2 se-
ries are not automatically approved; however, if approved, generally an extension will allow a maximum of 30 additional days from
the due date to furnish the statements to the recipients. The request must be postmarked by the date on which the statements are due
to the recipients.
*Note: The due date for the Form 1042 is March 15. To request an extension of time to file Form 1042, submit Form 2758
to the Internal Revenue Service, Philadelphia, PA 19255.
Sec. 12. Processing of Information Returns Magnetically at IRS/MCC
.01All data received at IRS/MCC for processing will be given the same protection as individual income tax returns (Form 1040).
IRS/MCC will process the data and determine if the records are formatted and coded according to this Revenue Procedure.
.02 If the data is formatted incorrectly, IRS/MCC will request a replacement file in writing. When IRS/MCC requests a
replacement file, it is because we encountered errors (not limited to format) and were unable to process the media. Filers will
receive a Media Tracking Slip (Form 9267) and letter detailing the reason(s) their media could not be processed. It is imper-
ative that filers maintain backup copies and/or recreate capabilities for their information return files.
• Areplacementis an information return file sent by the filer at the request of IRS/MCCbecause of errors encountered while pro-
cessing the filer’s original submission. After necessary changes have been made, the file must be resubmitted for processing along
with the Media Tracking Slip (Form 9267) which was included in the correspondence from IRS/MCC. Filers should never send any-
thing to IRS/MCC marked “Replacement” unless IRS/MCC has requested a replacement file in writing or via the FIRE System.
.03The following list of errors are considered fatal processing errors and will cause IRS/MCC to request a replacement file:
(a) Pre-processing Errors:
Damaged Media
Media Type Invalid/Missing
Invalid Record Length (MUSTbe 780 positions)
Invalid Block Size (can notexceed 23,400)
2001–33 I.R.B.139August 13, 2001

(b) Processing Errors:
Invalid Tax Year
Transmitter Control Code Invalid/Missing (MUSTbegin with “22”)
No Transmitter Record (“T” Record)
No Withholding Agent Record (“W” Record)
No Recipient Record (“Q” Record)
No Reconciliation Record (“C” Record)
No End of Transmission Record (“F” Record)
Records are not in proper sequence (e.g., T, W, Q, C, F)
No data entered in “W” Record
No data entered in “Q” Record
No data entered in “C” Record
Count of “Q” Records missing in “C” Record
Total “Q” Record count differs from count indicated in “C” Record
Total Gross Amount Paid missing in “C” Record
Total U.S. Tax Withheld missing in “C” Record
Total Gross Amount in “Q” Records differs from amount indicated in “C” Record
Total U.S. Tax Withheld amount in “Q” Records differs from amount indicated in “C” Record
.04 Magnetic media 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. Refer to Part C, Section 6, for procedures for correcting files submitted electronically. A penalty for fail-
ure to file correct information returns by the due date will be assessed if the files are not corrected and replaced within the 45 days or
if IRS/MCC requests replacement files more than two times.A penalty for intentional disregard of the filing requirements will
be assessed if a replacement file is not received. (For penalty information, refer to the Penalty section of the 2001 Instructions for
Form 1042–S.)
.05A letter identifying errors encountered will be provided. It is the responsibility of the transmitter to check the entire replace-
ment file for errors before resubmitting.
.06IRS/MCC will not return magnetic media. Therefore, if the transmitter wants proof that IRS/MCC received a shipment, the
transmitter should select a service with tracking capabilities or one that will provide proof of delivery.
.07IRS/MCC will work with filers as much as possible to assist with processing problems.
Sec. 13. Validation of Information Returns at IRS Service Center
.01The accuracy of data reported on Form 1042–S will now be reviewed and validated at the IRS Service Center. All fields indi-
cated as “Required”in the record layouts in Part B must contain valid information. If the Service identifies an error, you will be no-
tified by telephone or in writing to provide correct information.
.02 Know your recipient!
.03The tax rate entered must be a valid tax rate based on the Internal Revenue Code or on a valid treaty article. The valid treaty
rate is based on the recipient’s country of residence for tax purposes. The rate selected must be justified by the appropriate treaty.
.04The Gross Income amount field must reflect pretax income. The Gross Income amount is the total income paid before any de-
duction of tax at source.
.05If a qualified intermediary is acting as such, either as a withholding agent or as a recipient, the TIN reported must be a QI-EIN
and must begin with “98”.
.06 Country Codes used must be valid codes taken from the Country Code Table. Generally, the use of “OC” or “UC” will gen-
erate an error condition. If a recipient is claiming treaty benefits, the Country Code can never be “OC” or “UC”.
.07 If a recipient is an “Unknown Recipient” or “Withholding Rate Pool”, an address is not required. These are the only two sit-
uations where a street address is not required.
.08A U.S. TIN for a recipient is now generally required, particularly for most treaty benefits. The exceptions are very limited and
are listed in the 2001 Instructions for Form 1042–S.
.09Apply the following formula to determine U.S. Federal Tax Withheld (field positions 48–59 of the “Q” Record). All field po-
sitions described below are in the “Q” Record.
Income Codes (15 – 19)
All other Income Codes
Gross Income Paid (6–17)Gross Income Paid (6–17)
2Withholding Allowance (18–29)3Tax Rate (42–45)
= Net Income Amount (30–41)= U.S. Federal Tax Withheld (48–59)
3Tax Rate (42–45)
= U.S. Federal Tax Withheld (48–59)
.10If the Recipient Code is 20 (Unknown Recipient), the tax rate should be 30%.
August 13, 20011402001–33 I.R.B.

.11When making a payment to an international organization (e.g., United Nations) or a tax exempt organization under IRC
501(a), use Country Code “OC”. Use “UC” only when you have an “Unknown Recipient”.
.12When using Exemption Code 4, the Recipient Country of Residence Code for Tax Purposes MUST be a VALID treaty coun-
try (e.g., if tax resident of Northern Ireland, use United Kingdom). Do not use Exemption Code 4 unless a reduction or exemption of
tax is based on a treaty claim.
.13Generally, payments under Income Codes 06 and 08 are not exempt from withholding; however, certain exceptions apply.
See the 2001 Instructions for Form 1042–S.
.14If the type of income is from gambling winnings (Income Code 28) or is not specified (Income Code 50), the tax rate must
generally be 30%. This type of income is only exempt from withholding at source if the exemption is based on a tax treaty that has
an “Other Income” article.
.15If Income Code 20 (Earnings as Artist or Athlete) is used, the Recipient Code must be 09. Do not use Recipient Code 01 (In-
dividual), 02 (Corporation), or 03 (Partnership). Generally, the tax rate cannot be zero even if a treaty may apply.
.16When paying scholarship and fellowship grants (Income Code 15), the Recipient’s Country of Residence for Tax Purposes
must be identified and cannot be “OC” or “UC”. Grants that are exempt under Code Section 117, while no longer required, may be
reported on Form 1042–S.
*Note: Grants that are exempt under Code 117 include only amounts provided for tuition, fees, books, and supplies to a
qualified student. Amounts provided for room and board can only be exempted under a tax treaty and must be
reported on Form 1042–S whether exempt from tax or not.
.17If a student is receiving compensation (Income Code 19) or a teacher or a researcher is receiving compensation (Income Code
18), all or part of which is exempted from tax under a tax treaty, the Country of Residence for Tax Purposes must be identified and
cannot be “OC” or “UC”.
Sec. 14. Voided and Corrected Returns
.01 A corrected record must always have a corresponding voided record submitted prior to or in association with the corrected
record.
.02 To provide clarification of the correction process for Form 1042–S, the following definitions have been provided:
(a)A void record is an information return (Form 1042–S) submitted by the transmitter to delete a previously filed incorrect
original return. A void record must be a duplicate of the original successfully processed return with the exception of a Re-
turn Type Indicator of “1” (1 = Void) in field position 2 of the “W” and “Q” Records. The voided “Q” Record can be filed
with or without a corresponding correction record. For example, a Form 1042–S was submitted, and it should have been
prepared as a Form 1099. A “Q” Record with the original Form 1042–S information would be filed with a Return Type In-
dicator of “1” (1 = Void) in field position 2. In this instance, a corresponding “Q” Record coded as a correction would
NOTbe necessary.
(b)A correction is an information return (Form 1042–S) submitted by the transmitter to correct a return that was successfully
processed by IRS/MCC, but contained erroneous information. A Return Type Indicator of “2” (2 = Corrected) in field po-
sition 2 of the “W” and “Q” Records identifies a correction record. A corrected record must always have a correspond-
ing voided record submitted prior to or in association with the corrected record.
.03The magnetic media filing requirement of information returns of 250 or more applies separately to both original and corrected
returns.
If a withholding agent has 100 Forms 1042–S to be corrected, they can be
Efiled on paper because they fall under the 250 threshold. However,
Xif the withholding agent has 300 Forms 1042–S to be corrected, they must be
Afiled magnetically or electronically because they exceed the 250 threshold.
MIf for some reason a withholding agent cannot file the 300 corrections on
Pmagnetic media, to avoid penalties, a request for a waiver must be submitted
Lbefore filing on paper. If a waiver is approved for original documents, any
Ecorrections for the same type of return will be covered under this waiver.
.04Corrections should be filed as soon as possible. Corrections filed after August 1 may be subject to the maximum
penalty of $50 per return. Corrections filed by August 1 may be subject to a lesser penalty. For information on penalties, refer
to the Penalty section of the 2001 Instructions for Form 1042–S. However, if a withholding agent discovers errors after Au-
gust 1, it is still required to file corrections or the withholding agent will be subject to a penalty for intentional disregard of the
filing requirements. If a record is incorrect, all fields on that record must be completed with the correct information. Submit
corrections only for the returns filed in error. Do not submit the entire file. Furnish corrected statements to recipients as soon
as possible.
.05Corrected returns must be identified on the Form 4804 and the external media label by indicating “Correction”.
2001–33 I.R.B.141August 13, 2001

*Note: Do not include original returns and corrected returns on the same media or in the same electronic file.
.06If filers discover that certain information returns were omitted on their original file, they must not code these documents as
corrections. The file must be coded and submitted as an original file.
.07 Prior year data, original and corrected, mustbe filed according to the requirements of this Revenue Procedure. If submitting
prior year corrections, use the record format for the current year and submit on separate media. However, use the actual year desig-
nation of the correction in Field Positions 2–5 of the “T” Record. If filing electronically, a separate transmission must be made for
each tax year.
.08In general, filers should submit corrections for returns filed within the last 3 calendar years.
.09All paper returns, whether original or corrected, must be filed with Philadelphia Service Center.
.10Form 4804 must be submitted with corrected files submitted magnetically.
.11The “Q” Record provides a 20-position field (positions 72–91) for the recipient’s account number assigned by the withholding
agent. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. This
number should appear on the initial return and on the corrected return in order to identify and process the correction properly. Do
not enter a TIN in this field.
.12The record sequence for filing corrections is the same as for original returns.
.13Following is a chart showing the steps to be taken for voiding and correcting Form 1042–S:
Guidelines for Filing Corrected Returns Magnetically/Electronically
Transaction 1: Identify incorrect returns (void process)
The record sequence for filing corrections is the same as for original returns. Create the file in the following order exactly the same
as the original transmission:
(a)Transmitter “T” Record
(b)Withholding Agent “W” Record with a Return Type Indicator of “1” (1 = Void) in field position 2
(c)Recipient “Q” Record (s) with the exact information as submitted originally; however, place a Return Type Indicator of
“1” (1 = Void) in field position 2 of the “Q” Record (See Note)
(d)Prepare a Reconciliation “C” Record summarizing the preceding voided “Q” Records. (See sample format below.)
*Note: A voided “Q” Record may or may not have a corresponding corrected “Q” Record.
Transaction 2: Report the correct information (correction process)
If possible, on the same media or electronic submission prepare:
(a)Withholding Agent “W” Record with a Return Type Indicator of “2” (2 = Corrected) in field position 2
(b)Recipient “Q” Record(s) with the correct information. Place a “2” (2 = Corrected) in field position 2 of the “Q” Record
(c)Prepare a Reconciliation “C” Record summarizing the preceding corrected “Q” Records
(d)Prepare an End of Transmission “F” Record.
*Note: Each corrected “Q” Record MUST have a corresponding voided “Q” Record submitted prior to or in association
with the corresponding correction record.
Sample data sequence for void/correction records submitted in the same file:
“T” Record
“W” Record coded for voided records
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“C” Record to summarize voided records
“W” Record coded for corrected records
“Q” Record coded as corrected records
“Q” Record coded as corrected
“Q” Record coded as corrected
“C” Record to summarize corrected records
“F” Record
.14For information, on when an amended Form 1042 is required, refer to Pub. 515, Withholding of Tax on Nonresident Aliens
and Foreign Corporations.
August 13, 20011422001–33 I.R.B.

2001–33 I.R.B.143August 13, 2001
Sec. 15. Taxpayer Identification Number (TIN)
.01 Section 6109 of the Internal Revenue Code establishes the general requirements under which a person is required to furnish a
TIN to the person obligated to file the information return.
.02 The Withholding Agent must provide its EIN or QI-EIN, if appropriate, in the “W” Record and “T” Record if the Withholding
Agent is also the transmitter.
.03A recipient TIN (SSN, ITIN, EIN, QI-EIN) must be provided on every “Q” Record when:
(a) Tax rate is less than 30% (See the 2001 Instructions for Form 1042–S for exceptions)
(b) Income is effectively connected
(c) Recipient claims tax treaty benefits (generally)
(d) Recipient is a Qualified Intermediary
(e) An NRA individual claiming exemption from withholding on independent personal services
(f) Other situations may apply, see Publication 515
.04The recipient’s TIN and name combination are used to associate information returns reported to IRS/MCC with corresponding in-
formation on recipients’ tax returns. It is imperative that correctTaxpayer Identification Numbers (TINs) for recipients be provided to
IRS/MCC. DO NOT enter hyphens or alpha characters.Entering all zeros, ones, twos, etc., will have the effect of an incorrect TIN.
.05The withholding agent and recipient names with associated TINs should be consistent with the names and TINs used on other
tax returns.
*Note: For 2001 and future years, SSNs and ITINs are no longer valid for withholding agents to use. A withholding agent
must have a valid EIN and/or QI-EIN.
Sec. 16. Effect on Paper Returns and Statements to Recipients
.01Magnetic/electronic reporting of Form 1042–S eliminates the need to submit paper documents to the IRS. CAUTION: DO
NOT send Copy A of the paper forms to IRS for any forms filed on magnetic media or electronically.This will result in dupli-
cate filing.
.02Withholding agents are responsible for providing statements to the recipients as outlined in the 2001 Instructions for Form
1042–S. Refer to those instructions for filing Form 1042–S on paper with the IRS and furnishing statements to recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifi-
cations and guidelines in Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099,
1042–S, 5498, and W–2G.
.04The address for filing paper Forms 1042–S and Form 1042 is: Internal Revenue Service Center, Philadelphia, PA 19255. DO
NOTsend paper Forms 1042–S or 1042 to IRS/MCC.
Sec. 17. Definition of Terms
ElementDescription
Asynchronous ProtocolsThis type of data transmission is most often used by microcomputers,
PCs and some minicomputers.
Asynchronous transmissions transfer data at arbitrary time intervals
using the start-stop method. Each character transmitted has its own start
bit and stop bit.
b/Denotes a blank position. Enter blank(s) when this symbol is used (do
not enter the letter “b”). This appears in numerous areas throughout the
record descriptions.
Beneficial OwnerThe beneficial owner of income is, generally, the person who is required
under U.S. tax principles to include the income in gross income on a tax
return. For additional information and special conditions see Definitions
in the 2001 Instructions for Form 1042–S.
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. A cor-
rected record must always have a corresponding voided record submit-
ted prior to or in association with the corrected record.
Employer Identification A nine-digit number assigned by IRS for Federal tax reporting purposes.
Number (EIN)

August 13, 20011442001–33 I.R.B.
ElementDescription
Electronic Filing Submission of information returns using switched telecommunications
network circuits. These transmissions use modems, dial-up phone lines,
and asynchronous protocols. See Parts A and C of this publication for
specific information on electronic filing.
File For purposes of this Revenue Procedure, a file consists of one
Transmitter “T” Record at the beginning of the file, a Withholding Agent
“W” Record, followed by the Recipient “Q” Record(s), a Reconciliation
“C” Record summarizing the number of preceding “Q” Records and
total of preceding money fields. Follow with any additional “W”, “Q”,
and “C” Record sequences as needed. The last record on the file will be
the End of Transmission “F” Record. Nothing should be reported after
the End of Transmission “F” Record. A file format diagram is located at
the end of Part E, Miscellaneous Information just before the mail labels.
FilerPerson (may be withholding agent and/or transmitter) submitting infor-
mation returns to IRS.
FIREFiling Information Returns Electronically (FIRE) is the method for sub-
mitting Forms 1042–S electronically to IRS/MCC. See Part C.
Filing YearThe calendar year in which the information returns are being submitted
to IRS.
Flow–Through EntityA flow-through entity is a foreign partnership (other than a withholding
foreign partnership), or a foreign simple or grantor trust (other than a
withholding foreign trust). For any payments for which a reduced rate
of withholding under an income tax treaty is claimed, any entity is con-
sidered to be a flow-through entity if it is considered to be fiscally trans-
parent under IRC Section 894 with respect to the payment by an interest
holder’s jurisdiction.
Foreign PersonAforeign person includes a nonresident alien individual, a foreign cor-
poration, a foreign partnership, a foreign trust, a foreign estate, and any
other person that is not a U.S. person. The term also includes a foreign
branch or office of a U.S. financial institution or U.S. clearing organiza-
tion if the foreign branch is a Qualified Intermediary. Generally, a pay-
ment to a U.S. branch of a foreign person is a payment to a foreign person.
Gross IncomeGross income includes income from all sources, except certain items
expressly excluded by statute. Gross income is the starting point for
computing adjusted gross income and taxable income.
IRS Individual TaxpayerA nine-digit number issued by IRS to individuals who are required to
Identification Numberhave a U.S. taxpayer identification number for tax purposes but are not
(ITIN)eligible to obtain a social security number (SSN).
Information ReturnThe vehicle for withholding agents to submit required tax information
about a recipient to IRS. For this Revenue Procedure, it is information
about a foreign person’s U.S. source income subject to withholding, and
the information return is Form 1042–S.
IntermediaryAn intermediary is a person that acts as a custodian, broker, nominee, or
otherwise as an agent for another person, regardless of whether that other
person is the beneficial owner of the amount paid, a flow-through entity,
or another intermediary.
ISDN - Integrated Services ISDN’s basic service is Basic Rate Interface (BRI) which is made up
Digital Networkof two 64Kbps B channels and one 16Kbps D channel. If both channels
are combined into one, called bonding, the total data rate becomes
128Kbps and is 4 1/2 times the bandwidth of a 28.8 modem.

2001–33 I.R.B.145August 13, 2001
ElementDescription
Magnetic Media For this Revenue Procedure, the term magnetic media refers to 9-track
magnetic tape; IBM 3480, 3490, 3490E, 3590, 3590Eor AS400 com-
patible tape cartridge; 8mm, 4mm, and QIC (Quarter Inch Cartridge)
cartridge or 3 1/2-inch diskette.
Media Tracking SlipForm 9267 accompanies correspondence sent by IRS/MCC requesting
a replacement file due to incorrect format or certain errors encountered
when trying to process the media. This form must be returned with
the replacement file.
Nonqualified IntermediaryA Nonqualified Intermediary is any intermediary that is not a U.S.
(NQI)person and that is not a Qualified Intermediary.
PayerA payer is the person for whom the withholding agent acts as a paying
agent pursuant to an agreement whereby the withholding agent agrees to
withhold and report a payment.
Presumption RulesThe presumption rules are those rules prescribed under Chapter 3 and
Chapter 61 of the Internal Revenue Code that a withholding agent must
follow to determine the status of a beneficial owner as a U.S. or foreign
person when it cannot reliably associate a payment with valid documen-
tation.
Pro-Rata Basis ReportingIf the withholding agent has agreed that an NQI may provide informa-
tion allocating a payment to its account holders under the provisions of
Regulations section 1.1441–1(e)(3)(iv)(D), and the NQI fails to allocate
the payment in a withholding rate pool to the specific recipients in the
pool, the withholding agent must file a Form 1042–S for each recipient
on a pro-rata basis.
Qualified IntermediaryA Qualified Intermediary is an intermediary that is a party to a with-
(QI)holding agreement with the IRS, in which it agrees to comply with the
relevant terms of Chapter 3 and 61 of the Internal Revenue Code.
Qualified Intermediary A nine-digit number assigned by IRS to a QI for Federal tax
Employer Identification reporting purposes. A QI-EIN should be used only when the QI is not
Number (QI-EIN)filing on its own behalf.
RecipientPerson (nonresident alien individual, fiduciary, foreign partnership, for-
eign corporation, Qualified Intermediary, Withholding Rate Pool, or
other foreign entity) that receives payments from a withholding agent as
a beneficial owner or as a qualified intermediary acting on behalf of a
beneficial owner. A non-qualified intermediary can not be a recipient.
Replacement FileA replacement file is an information return file sent by the filer at the
request of IRS/MCCbecause of certain errors encountered while pro-
cessing the filer’s original submission.
Service BureauPerson or organization with whom the withholding agent has a contract
to prepare and/or submit information return files to IRS/MCC. A parent
company submitting data for a subsidiary is not considered a service
bureau.
Social Security Number A nine-digit number assigned by Social Security Administration to an
(SSN)individual for wage and tax reporting purposes.
Special CharacterAny character that is nota numeric, an alpha, or a blank.
Taxpayer Identification Number Refers to either an Employer Identification Number (EIN), Social
(TIN) Security Number (SSN), IRS Individual Taxpayer Identification Number
(ITIN), or a Qualified Intermediary Employer Identification Number
(QI-EIN).

ElementDescription
Tax YearThe year in which payments were made by a withholding agent to a
recipient.
TransmitterRefers to the person or organization submitting file(s) magnetically/elec-
tronically. The transmitter may be the payer, agent of the payer, or with-
holding agent.
Transmitter Control Code A five-character alpha/numeric number assigned by IRS/MCC to the
(TCC)transmitter prior to filing magnetically or electronically. An application
Form 4419 must be filed with IRS/MCC to receive this number. This
number is inserted in the Transmitter “T” Record (field positions 190–
194) of the file and must be present before the file can be processed.
Transmitter Control Codes assigned to 1042–S filers will always begin
with “22”.
Unknown RecipientFor this Revenue Procedure, an unknown recipient is a recipient for
which no documentation has been received by a withholding agent or
intermediary or for which documentation received can not be reliably
associated. An unknown recipient is always subject to withholding at the
maximum applicable rate.
VendorVendors include service bureaus that produce information return files on
the prescribed types of magnetic media or via electronic filing for with-
holding agents. Vendors also include companies that provide software
for those who wish to produce their own media or electronic files.
VoidA void record is used in the correction process of Form 1042–S. For pur-
poses of this Revenue Procedure, a void record is submitted by the trans-
mitter to delete a previously filed incorrect original Form 1042–S. A
void record must be a duplicate of the original successfully processed
record with the exception of a “1” in field position 2 of the “W” and “Q”
Records.
Withholding AgentAny person, U.S. or foreign, that has control, receipt, or custody of an
amount subject to withholding or who can disburse or make payments of
an amount subject to withholding. The withholding agent may be an
individual, corporation, partnership, trust, association, or any other enti-
ty. The term withholding agent also includes, but is not limited to, a
qualified intermediary, a nonqualified intermediary, a withholding for-
eign partnership, a withholding foreign trust, a flow-through entity, a
U.S. branch of a foreign insurance company or foreign bank that is treat-
ed as a U. S. person, and an authorized foreign agent. A person may be
a withholding agent even if there is no requirement to withhold from a
payment or even if another person has already withheld the required
amount from a payment.
Withholding ForeignA foreign partnership or trust that has entered into a withholding or
Partnership Withholding Foreign Trust agreement with the IRS in which it agrees to
assume primary withholding responsibility for all payments that are
made to it for its partners, beneficiaries, or owners.
Sec. 18. State Abbreviations
.01The following state and U.S. territory abbreviations are to be used when developing the state code portion of address fields.
This table provides state and territory abbreviations.
State CodeState Code StateCode
AlabamaALLouisianaLAOhioOH
Alaska AK MaineME OklahomaOK
American Samoa AS MarylandMD OregonOR
Arizona AZMassachusettsMAPennsylvaniaPA
August 13, 20011462001–33 I.R.B.

State CodeState Code StateCode
ArkansasAR MichiganMIPuerto RicoPR
CaliforniaCAMinnesotaMNRhode IslandRI
ColoradoCOMississippiMSSouth CarolinaSC
Connecticut CTMissouriMOSouth Dakota SD
Delaware DE MontanaMTTennessee TN
District of Columbia DC NebraskaNETexasTX
FloridaFLNevadaNVUtah UT
GeorgiaGANew HampshireNHVermontVT
GuamGUNew JerseyNJVirginia VA
HawaiiHINew MexicoNM(U.S.) Virgin Islands VI
IdahoIDNew YorkNYWashingtonWA
IllinoisILNorth CarolinaNCWest Virginia WV
IndianaINNorth DakotaNDWisconsinWI
IowaIANorthernWyomingWY
KansasKSMariana IslandsMP
KentuckyKY
.02When reporting APO/FPO addresses use the following format:
EXAMPLE:
Payee NamePVT Willard J. Doe
Mailing AddressCompany F, PSC Box 100
167 Infantry REGT
Payee City APO (or FPO)
Payee State AE, AA, or AP*
Payee ZIP Code 098010100
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Part B. Magnetic Media Specifications
Sec. 1. General
.01The specifications contained in this part of the Revenue Procedure define the requiredformat and content of the records to be
included in the magnetic media/electronic file. Do not deviate from this format.
.02Transmitters must be consistent in the use of recording modes and density on files. If the media does not meet these specifi-
cations, IRS/MCC will request a replacement file. Filers are encouraged to submit a test prior to submitting the actual file. Contact
IRS/MCC for further information at 304-263-8700.
.03Regardless of the type of media used or if returns are filed electronically, the record length must be 780 positions.
Sec. 2. Tape Specifications'
*Note: Beginning in calendar year 2003 for Tax Year 2002, IRS/MCC will no longer accept 9-track tape for filing Form
1042–S.
.01IRS/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)A density of 1600 or 6250 BPI,
(3)If transmitters use UNISYS Series 1100, they must submit an interchange tape.
(b)9-track ASCII (American Standard Coded Information Interchange) with:
(1)Odd parity,
(2)A density of 1600 or 6250 BPI.
Transmitters should be consistent in the use of recording codes and density on files.
.02All compatible tape files must have the following characteristics: Type of tape - 1/2-inch (12.7 mm) wide, computer-grade
magnetic tape on reels of up to 2,400 feet (731.52 m) within the following specifications:
(a)Tape thickness: 1.0 or 1.5 mils and
(b) Reel diameter: 10 1/2-inch (26.67 cm), 8 1/2-inch (21.59 cm), 7-inch (17.78 cm), or 6-inch.
2001–33 I.R.B.147August 13, 2001

.03The tape records defined in this Revenue Procedure may be blocked subject to the following:
(a)A blockmust notexceed 23,400 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 780.
(d)Records may not span blocks.
.04Labeled or unlabeled tapes may be submitted.
.05For the purposes of this Revenue Procedure the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
.06IRS/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 mustend with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
Sec. 3. Tape Cartridge Specifications
.01In most instances, IRS/MCC can process tape cartridges that meet the following specifications:
(a)Must be IBM 3480, 3490, 3490E, 3590, 3590E or AS400 compatible.
(b)Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(1)Tape cartridges will be 1/2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2)Magnetic tape will be chromium dioxide particle based 1/2-inch tape.
(3)Cartridges must be 18-track, 36-track, 128-track, or 256-track parallel (See Note).
(4)Cartridges will contain 37,871 CPI or 75,742 CPI (characters per inch).
(5)Mode will be full function.
(6)The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02The tape cartridge records defined in this Revenue Procedure may be blocked subject to the following:
(a)A block must notexceed 23,400 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 780.
(d)Records may not span blocks.
.03Tape cartridges may be labeled or unlabeled.
.04For the purposes of this Revenue Procedure, the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
*Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 18-track,
36-track, 128-track or 256-track.
Sec. 4. 8mm, 4mm, and Quarter-Inch Cartridge Specifications
.01In 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
August 13, 20011482001–33 I.R.B.

(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
Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear on the
external media label affixed to the cartridge.
(7) 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, 1042TAX, will contain a three digit extension. The extension will indicate the
sequence of the cartridge within the file (e.g., 1 of 3, 2 of 3, and 3 of 3 will appear in the header label as 1042TAX.001,
1042TAX.002, and 1042TAX.003 on each cartridge of the file). The Transmitter “T” Record must only appear on the
first cartridge. The End of Transmission “F” Record should be placed only on the last cartridge for files containing multi-
ple cartridges.
.02The 8mm (.315-inch) tape cartridge records defined in this Revenue Procedure may be blocked subject to the following:
(a)A block must notexceed 23,400 tape positions.
(b) If the use of blocked records would result in a short block, the last block of the file may be filled with 9s or truncated.
(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 780.
(d)Various COPY commands have been successful; however, the SAVE OBJECT COMMANDis not acceptable.
(e)Extraneous data following the “F” Record will result in IRS/MCC requesting a replacement file.
(f)Records may not span blocks.
(g) No more than 250,000 documents per cartridge and per file.
*Note: Advanced Metal Evaporated (AME) cartridges are not acceptable.
.03For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. 1042TAX may be used as a sug-
gested filename.
.04For the purposes of this Revenue Procedure, the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
.05If extraneous data follows the End of Transmission “F” Record, IRS/MCC will request a replacement file. Therefore,
IRS/MCC encourages transmitters to use blank tape cartridges, rather than cartridges previously used, in the preparation of data
when submitting information returns.
.06IRS/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.
.074mm (.157-inch) cassettes are now 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 (60 meter) or 2 Gb (90 meter), or DDS-2 at 4Gb (120 meter).
(e)The general specifications for 8mm cartridges also apply to the 4mm cassettes.
*Note: 4mm cassettes with a capacity of DDS-3 (125 meter) are not acceptable.
.08Various 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:
SizeTracks DensityCapacity
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
(c)The general specifications that apply to 8mm cartridges also apply to QIC cartridges.
2001–33 I.R.B.149August 13, 2001

Sec. 5. 3 1/2-Inch Diskette Specifications
IRS/MCC has discontinued processing 5 1/4-inch diskettes. Filers must use other methods to submit Form 1042–S mag-
netically/electronically.
.01To be compatible, a diskette file must meet the following specifications:
(a)3 1/2-inches in diameter.
(b)Data mustbe recorded in standard ASCII code.
(c)Records must be a fixed length of 780 bytes per record.
(d)Delimiter character commas (,) must not be used.
(e)Positions 779 and 780 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applicable.
(f)Filename of 1042TAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,
the filename 1042TAX will contain a three-digit extension. This extension will indicate the sequence of the diskettes within
the file. For example, if the file consists of three diskettes, the first diskette will be named 1042TAX.001, the second will be
1042TAX.002, and the third will be 1042TAX.003. The first diskette, 1042TAX.001 will begin with a “T” Record and the
third diskette, 1042TAX.003 will have an “F” Record at the end of the file.
(g)A diskette will not contain multiple files as defined in Part A, Section 17. A file may have only ONETransmitter “T”
Record.
(h)Failure to comply with instructions will result in IRS/MCC requesting a replacement file.
(i)Diskettes must meet one of the following specifications:
CapacityTracksSides/DensitySector Size
1.44 mb96tpi hd 512
1.44 mb135tpihd512
.02IRS/MCC encourages transmitters to use blank or currently formatted diskettes when preparing files. If extraneous data fol-
lows the End of Transmission “F” Record, IRS/MCC will request a replacement file.
.03IRS/MCC will onlyaccept 3 1/2-inch diskettes created using MS-DOS.
*Notes: IRS no longer has the capability to process non-MS-DOS compatible diskettes.
3 1/2-inch diskettes created on a System 36 or AS400 are not
acceptable.
.04 Transmitters should check media for viruses before submitting it to IRS/MCC.
Sec. 6. Transmitter “T” Record
.01 This record identifies the entity preparing and transmitting the file. The transmitter and the withholding agent may be the
same, but they need not be.
.02 The first record of a file MUSTbe a Transmitter “T” Record (preceded only by header labels). The “T” Record must appear
on each tape and cartridge; otherwise a replacement file may be requested.
.03 The “T” Record is a fixed length of 780 positions.
.04 All alpha characters entered in the “T” Record must be upper case.
*Note 1: For all fields marked Required, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions, IRS will contact you to
request correct information. For those fields not marked Required, a transmitter must allow for the field, but
may be instructed to enter blanks or zeroes in the indicated media position(s) and for the indicated length. All
records have a fixed length of 780 positions.
*Note 2: A copy of the 2001 Instructions for Form 1042–S is included at the end of this publication. These instructions
should be used for the proper coding of each field in this record where applicable. The Instructions are updated
each year as required.
Record Name: Transmitter “T” Record
Field Field TitleLengthDescription and Remarks
Positions
1Record Type1Required. Enter “T”.
2–5Tax Year4Required. Enter year for which income and withholding are being reported.
August 13, 20011502001–33 I.R.B.

Record Name: Transmitter “T” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
6–14Transmitter’s Taxpayer9Required. Enter the Taxpayer Identification Number of the Transmitter.
Identification NumberThis can be a Social Security Number (SSN), IRS Individual Taxpayer
(TIN)Identification Number (ITIN), Employer Identification Number (EIN), or
Qualified Intermediary Number (QI-EIN). DO NOT ENTER blanks,
hyphens or alpha characters. A TIN consisting of all the same digits
(e.g., 111111111) is not acceptable.
15–54Transmitter Name40Required. Enter name of transmitter of file. Abbreviate if necessary to fit
40-character limit. Omit punctuation if possible. Left-justify and blank fill.
*Note: Do not use special characters in names or addresses that are unique to a language other than English. For example,
å = A, æ = A, ú ́ = U, Ø
́
= O, ̆n = N, etc.
55–94Transmitter Address40Required.Enter full mailing address of the transmitter. This will include
number, street, and apartment or suite number (P.O. Box can be used if
mail is not delivered to street address). Abbreviate as needed to fit 40-char-
acter limit. Omit punctuation if possible. Left-justify and blank fill.
95–114City20Required. Enter the city or town (or other locality name) of transmitter.
If applicable, enter APO or FPO only. Left-justify and blank fill.
115–116State Code2Required if U.S. Transmitter.Enter only the two-alpha State Code. DO
NOT spell out the state name. See State Code Table Part A, Sec. 18.
117–118Province Code2Required if Foreign Country Code is “CA” (Canada).Enter only the two-
alpha character Province Code as shown in the Province Code table. DO
NOT spell out the Province Name. If foreign country other than
Canada, blank fill.
Province CodeProvince
ABAlberta
BCBritish Columbia
LBLabrador
MBManitoba
NBNew Brunswick
NFNewfoundland
NSNova Scotia
NTNorthwest Territories
ONOntario
PEPrince Edward Island
PQQuebec
SKSaskatchewan
YKYukon Territory
119–120Country Code2Required if Foreign Transmitter. If Country Code is present, State
Code field MUST be blank. Enter only the two-alpha Country Code from
the Country Code table. DO NOT spell out the Country Name.
*Note 1: COUNTRY CODES: The list of country codes provided in the 2001 Instructions for Form 1042-S includes all inter-
nationally recognized country codes and must be used to ensure the proper coding of the Country Code field. This
list is updated each year as required.
*Note 2: Do not enter U.S. in the Country Code field. Enter the code for the country of which the recipient claims residen-
cy under that country’s tax laws. Enter “OC” (other country) onlywhen the country of residence does not appear
on the list or the payment is made to an international organization.
*Note 3: Enter “UC” (unknown country) onlyif the payment is to an unknown recipient. If you are making a payment to
a QI or QI withholding rate pool, enter the country code of the QI.
2001–33 I.R.B.151August 13, 2001

Record Name: Transmitter “T” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
121–129Postal Zip Code9Required if U.S. address. Enter up to nine numeric characters for all
U.S. addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses.Enter the foreign postal code. Left-
justify and zero fill the remaining positions. DO NOT use hyphens.
130–169Contact Name40Required. Enter the name of the person to contact if any questions should
arise with the transmission.
170–189Contact Telephone 20Required. Enter the contact person’s telephone number, and extension,
Number if applicable. If foreign, provide appropriate codes for overseas calls. Left-
justify.
190–194Transmitter Control Code5Required. Enter the five-character alpha/numeric TCC assigned ONLY
(TCC)for Form 1042–S reporting. (The first two numbers will always be22).
195–198Test Indicator4Required if this is a test file. Enter the word “TEST”. Otherwise enter
blanks.
199–778Reserved580Blank fill.
779–780Blank or Carriage 2Required.Enter blanks or carriage return line feed (CR/LF) characters.
Return Line Feed
Transmitter “T” Record Layout
RecordTaxTransmitter’sTransmitterTransmitter
City
StateProvince
TypeYearTINNameAddressCodeCode
12–56–1415–5455–9495–114115–116117–118
CountryPostal Contact
Contact
Test Blank or Carriage
CodeZip CodeName
TelephoneTCC
Indicator
Reserved
Return Line Feed
Number
119–120121–129130–169170–189190–194195–198199–778779–780
Sec. 7. Withholding Agent “W” Record
.01 The “W” Record identifies the Withholding Agent.
.02 Enter a “W” Record after the initial “T” Record on the file followed by the Recipient “Q” Records, and a Reconciliation “C”
Record.
.03 Several “W” Records for different Withholding Agents may appear on the same Transmitter’s File.
.04 Each “W” Record is a fixed length of 780 positions.
.05 All alpha characters entered in the “W” Record must be upper case.
*Note 1: For all fields marked Required, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions, IRS will contact you to
request correct information. For those fields not marked Required, a transmitter must allow for the field, but
may be instructed to enter blanks or zeroes in the indicated media position(s) and for the indicated length. All
records have a fixed length of 780 positions.
*Note 2: A copy of the 2001 Instructions for Form 1042-S is included at the end of this publication. These instructions
should be used for the proper coding of each field in this record where applicable. The list of country codes in the
instructions includes all recognized country codes and MUST be used for coding. The instructions are updated
each year as required.
August 13, 20011522001–33 I.R.B.

Record Name: Withholding Agent “W” Record
Field Field TitleLengthDescription and Remarks
Positions
1Record Type1Required. Enter “W”.
2Return Type1Required.Enter the one position value below to identify whether the
Indicator record is Original, Void or Corrected.
Values are:
• 0 (Zero) = Original
• 1 = Void
• 2 = Corrected
3Pro Rata Basis Reporting1Required.Enter the one position value below to identify if reporting on
a Pro Rata Basis.
Values are:
• 0 (Zero) = Not Pro Rata
• 1 = Pro Rata Basis Reporting
4–12Withholding9 Required. Enter the nine-digit Employer Identification Number of the
Agent’s EINWithholding Agent. Do NOTenter blanks, hyphens or alpha characters.
An EIN consisting of all the same digits (e.g., 111111111) is not acceptable.
Do NOTenter the recipient’s TIN in this field.
*Note: See 2001 Instructions for Form 1042–S to determine when a Qualified Intermediary must provide its QI-EIN in this
field.
13Withholding Agent’s EIN1Required.Enter the Withholding Agent’s EIN indicator from the
Indicatorfollowing values:
• 1 = EIN
• 2 = QI-EIN
14–53Withholding Agent’s40Required. Enter the Withholding Agent’s Name as established when
Name Line-1filing for the EIN or QI-EIN which appears in position 4–12 of the “W”
Record. Left-justify and blank fill.
*Note: Do not use special characters in names or addresses that are unique to a language other than English. For example,
å = A, æ = A, ú ́ = U, Ø
́
= O, ̆n = N, etc.
54–93Withholding Agent’s40Enter supplementary withholding agent’s name information; otherwise
Name Line-2enter blanks. Use this line for additional names (e.g., partners or joint own-
ers), for trade names, stage names, aliases or titles. Also use this line for
“care of” or “via”. Valid characters are alpha, numeric, blank, ampersand
(&), hyphen (-), comma (,), and the percent (%). The percent [% (used as
“in care of”)] is valid in the first position only.
94–133Withholding Agent’s 40See above.
Name Line-3
134–173Withholding Agent’s 40Required.Enter the mailing address of the withholding agent.
Street Line-1Street address should include number, street, and apartment or suite num-
ber (or P.O. Box if mail is not delivered to street address). Abbreviate as
needed. Left-justify and blank fill.
174–213Withholding Agent’s40Enter supplementary withholding agent street address information.
Street Line-2Otherwise blank fill.
214–253Withholding Agent’s City40Required.Enter the city or town (or other locality name). Enter APO or
FPO only if applicable. Left-justify and blank fill.
254–255Withholding Agent’s2Required if U.S. Withholding Agent.Enter the two-character State
State CodeCode abbreviation. If not a U.S. state, territory or APO/FPO identifiers,
blank fill. Do not use any of the two character Country Codes in the
State Code Field.
2001–33 I.R.B.153August 13, 2001

Record Name: Withholding Agent “W” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
256–257Withholding Agent’s2Required if Foreign Country Code is “CA” (Canada).Enter
Province Codeonly the two-alpha character Province Code as shown in the Province Code
Table. See “T” record positions 117–118 for Province Code Table. DO
NOT spell out the Province Name. If foreign country other than
Canada, blank fill.
258–259Withholding Agent’s2Enter only the two-alpha Country Code from the Country Code Table.
Country CodeDO NOT spell out the Country Name.
*Note 1: COUNTRY CODES: The list of country codes provided in the 2001 Instructions for Form 1042–S includes all
internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code
field. This list is updated each year as required.
*Note 2: Do not enter U.S. in the Country Code field. Enter the code for the country of which the recipient claims resi-
dency under that country’s tax laws. Enter “OC” (other country) onlywhen the country of residence does not
appear on the list or the payment is made to an international organization.
*Note 3: Enter “UC” (unknown country) onlyif the payment is to an unknown recipient. If you are making a payment to
a QI or QI withholding rate pool, enter the country code of the QI.
260–268Postal Zip Code9Required if U.S. address. Enter up to nine numeric characters for all U.S.
addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses. Enter the foreign postal code. Left-
justify and zero fill the remaining positions. DO NOT use hyphens.
269–272Tax Year4Required. Enter the four-digit year of the calendar year for which income
and withholding are being reported. All recipient “Q” Records must report
payments for this year only. Different tax years may not appear on the
same file.
273–292Withholding Agent’s20Required. Enter the Withholding Agent’s telephone number and
Phone Numberextension, if applicable. If foreign, provide appropriate codes for
and Extensionoverseas call. Left-justify.
293Final Return Indicator1Required. Enter the one position value below to indicate whether you will
be filing Forms 1042–S in the future.
• 0 (Zero) = will be filing
• 1 = will not be filing
294–778Reserved485Blank fill.
779–780Blank or Carriage2Required.Enter blanks or carriage return line feed characters
Return Line Feed(CR/LF).
Withholding Agent “W” Record Layout
ReturnPro Rata WithholdingWithholdingWithholding
Record
TypeBasis
Withholding
Agent’s EINAgent’s NameAgent’s Name
Type
IndicatorReporting
Agent’s EIN
IndicatorLine 1Line 2
1234–121314–5354–93
WithholdingWithholdingWithholding
Withholding
WithholdingWithholdingWithholding
Agent’s NameAgent’s Agent’s
Agent’s City
Agent’sAgent’sAgent’s
Line 3Street-1Street-2State CodeProvince CodeCountry Code
94–133134–173174–213214–253254–255256–257258–259
August 13, 20011542001–33 I.R.B.

Withholding Agent “W” Record Layout (continued)
Postal Zip
Withholding Agent’s
Final Return
Blank or
Code
Tax YearPhone Number and
Indicator
ReservedCarriage Return
ExtensionLine Feed
260–268269–272273–292293294–778779–780
Sec. 8. Recipient “Q” Record
.01 The “Q” Record contains name and address information for the Recipient of Income, Non-Qualified Intermediary or Flow-
Through Entity if appropriate, Payer, and all data concerning the income paid and tax withheld that is required to be reported under
U.S. law. Each Recipient “Q” Record is treated as if it were a separate Form 1042–S.
.02 Since the “Q” Record is restricted to one type of income and one tax rate, under certain circumstances it may be necessary to
write more than one “Q” Record for the same recipient. Failure to provide multiple Recipient “Q” Records when necessary will gen-
erate math computation errors during processing. This will result in IRS contacting you for correct information.
.03Following are some of the circumstances when more than one “Q” Record for a recipient would be required:
(a) Different types of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Indus-
trial Royalties (Income Code 10). A separate “Q” Record must be reported for each Income Code, providing Gross In-
come Paid and U.S. Federal Tax Withheld pertaining to that Income Code.
(b) Change in Country Code during the year. For example, the Withholding Agent received notification via Form W–8BEN
that the recipient’s country of residence for tax purposes changed from country X to country Y. A separate “Q” Record
must be reported for each Country Code providing Gross Income Paid, Tax Rate, U.S. Federal Tax Withheld and Exemp-
tion Code, if any. The amounts reported must be based on each country.
(c) Change in a country’s tax treaty rate during the year. For example, effective April 1, country X changes its tax treaty rate
from 10% to 20%. A separate “Q” Record must be reported for each of the tax rates. Provide the Gross Income Paid, Tax
Rate, and U.S. Federal Tax Withheld under each tax rate.
.04 All recipient “Q” Records for a particular Withholding Agent must be written after the corresponding Withholding Agent “W”
Record, followed by a Reconciliation “C” Record, and before the “W” Record for another Withholding Agent begins.
.05All alpha characters entered in the “Q” Record must be upper case.
.06Report income and tax withheld in whole dollars only. Round up or down as appropriate. DO NOTenter cents.
*Note 1: For all fields marked Required, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions, IRS will contact you to
request the correct information. For those fields not marked Required, a transmitter must allow for the field, but
may be instructed to enter blanks or zeroes in the indicated media position(s) and for the indicated length. All
records have a fixed length of 780 positions.
*Note 2: A copy of the 2001 Instructions for Form 1042–S is included at the end of this publication. These instructions
should be used for the proper coding of each field in this record where applicable. The list of country codes in the
instructions includes all recognized country codes and MUST be used for coding. The instructions are updated
each year as required.
Record Name: Recipient “Q” Record
Field Field TitleLengthDescription and Remarks
Positions
1Record Type1Required. Enter “Q”.
2Return Type 1Required.Enter the one position value below to identify whether the
Indicatorrecord is Original, Void, or Corrected. Values are:
• 0 (Zero) = Original
• 1 = Void
• 2 = Corrected
3Pro Rata Basis 1Required.Enter the one position value below to identify whether report-
Reportinging Pro Rata Basis.
Values are:
• 0 (Zero) = Not Pro Rata
• 1 = Pro Rata Basis Reporting
2001–33 I.R.B.155August 13, 2001

Record Name: Recipient “Q” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
4–5Income Code2Required.Enter the two-position value EXACTLY as it appears from the
income code table. The Income Code must accurately reflect the type of
income paid. DO NOT enter blanks or 00 (zeroes).
*Note: The Income Code list has been expanded for TY2001. Refer to the 2001 Instructions for Form 1042–S for more information.
6–17Gross Income12Required.Enter the gross income amount in whole dollars only (do not
enter cents). An income amount of zero cannot be shown. Right-justify.
18–29Withholding Allowance12Used with Income Code 15 or 16 ONLY. Enter the withholding
allowance amount in whole dollars only (do not enter cents). Right-justify
and zero fill. Otherwise enter blanks.
30–41Net Income12Required if Dollar Amount is Entered in Withholding Allowance
Field. Enter the net income in whole dollars only (do not enter cents). An
amount other than zero mustbe shown. Right-justify and zero fill.
Otherwise enter blanks.
42–45Tax Rate4Required. Enter the correct Tax Rate applicable to the income in gross
income field or net income field, as appropriate. Enter the Tax Rate as a 2-
digit whole number and 2-digit decimal (e.g. Enter 39.6% as 3960). See
Note below.
*Note: The correct Tax Rate must be entered, even if withholding was at a lesser rate. See the 2001 Instructions for Form
1042–S.
46–47Exemption Code2Required.
• If the tax rate entered is 0%, enter the appropriate exemption code “01”
through “09” from the 2001 Instructions for Form 1042–S.
• If the tax rate entered is 1% through 30%, enter “00”.
• If the tax rate entered is 31% or higher, blank fill. DO NOT enter “00”.
See the 2001 Instructions for Form 1042–S for circumstances under which
Exemption Code “99” must be used.
*Note: If an incorrect amount of tax was withheld, report the amount that was actually withheld and use the correct tax
treaty rate in field positions 42–45.
48–59U. S. Tax Withheld12Required.Enter the U.S. Federal tax withheld amount in whole dollars
only (do not enter cents). Right-justify and zero fill.
60–71Amount Repaid12This field should be completed only if:
• you repaid a recipient an amount that was over-withheld and you are
going to reimburse yourself by reducing, by the amount of tax actually
repaid, the amount of any deposit made for a payment period in the cal-
endar year following calendar year of withholding.
72–91Recipient Account 20Enter the account number assigned by the withholding agent to the recipi-
Numberent. Do not enter the recipient’s U.S. or foreign TIN. If account numbers
are NOT assigned, then blank fill. This field may contain numeric, alpha
characters, blanks or hyphens. Left-justify and blank fill.
92–93Recipient Code2Required.Enter the appropriate Recipient Code. Refer to the expand-
ed list of appropriate codes in the 2001 Instructions for Form 1042–S.
No other codes or values are valid.
94–133Recipient’s Name 40Required.Provide the complete name of the recipient. If the recipient has
Line-1a U.S. TIN, enter the name as established when applying for the TIN. See
2001 Instructions for Form 1042–S for specifics on “Unknown Recipient”
and “Withholding Rate Pool”. Valid characters are alpha, numeric, amper-
sand (&), hyphen (-), comma (,), or blank. Left-justify and blank fill.
August 13, 20011562001–33 I.R.B.

Record Name: Recipient “Q” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
*Note 1: A Non-Qualified Intermediary (NQI) can NEVER be entered as the recipient.
*Note 2: Do not use special characters in names or addresses that are unique to a language other than English. For exam-
ple, å = A, æ = A, ú ́ = U, Ø
́
= O, ̆n = N, etc.
134–173Recipient’s Name 40Enter supplementary recipient name information including titles; otherwise
Line-2enter blanks. Use this line for additional names (e.g., partners or joint own-
ers), for trade names, stage names, aliases or titles. Also use this line for
“care of” or “via”. Valid characters are alpha, numeric, blank, ampersand
(&), hyphen (-), comma (,), and the percent (%). The percent [% (use as “in
care of”)] is valid in the first position only.
174–213Recipient’s Name 40See above.
Line-3
214–253Recipient’s Street 40Required.Enter the mailing address of the recipient. Street address
Line-1should include number, street, apartment, or suite number (or P.O. Box if
mail is not delivered to street address). Abbreviate as needed. Left-justi-
fy and blank fill.
254–293Recipient’s Street 40Enter supplementary recipient street address information; otherwise blank
Line-2fill.
294–333Recipient’s City40Required. Enter the city or town (or other locality name). Enter APO or
FPO only, if applicable. Left-justify and blank fill.
334–335Recipient’s State2Required if U.S. address.Enter the two-character State Code abbreviation.
If no U.S. state, territory or APO/FPO identifier is applicable then blank
fill. Do not use any of the two-character Country Codes in the State
Code Field.
336–337Recipient’s Province 2Required if Foreign Country Code is “CA” (Canada).Enter only the two-
Codealpha character Province Code as shown in the Province Code Table. See
“T” record positions 117–118 for Province Code Table. DO NOT spell
out the Province Name. If foreign country other than Canada, blank fill.
338–339Recipient’s Country 2Required.Enter the two-character Country Code abbreviation, if
Codeapplicable.
340–348Postal Zip Code9Enter up to nine numeric characters for all U.S. addresses (including terri-
tories, possessions and APO/FPO). For foreign addresses, enter the foreign
postal code. Enter this code in the left most position and zero fill the
remaining positions. DO NOTuse hyphens. Left-Justify.
*Note 1: COUNTRY CODES: The list of country codes provided in the 2001 Instructions for Form 1042–S includes all
internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code
field. This list is updated each year as required.
*Note 2: Do not enter U.S. in the Country Code field. Enter the code for the country of which the recipient claims
residency under that country’s tax laws. Enter “OC” (other country) onlywhen the country of residence does not
appear on the list or the payment is made to an international organization.
*Note 3: Enter “UC” (unknown country) onlyif the payment is to an unknown recipient. If you are making a payment to
a QI or QI withholding rate pool, enter the country code of the QI.
349–357Recipient’s U.S. TIN9Required.Enter the recipient’s nine-digit U.S. Taxpayer Identification
Number (TIN). DO NOTenter hyphens or alpha characters. If TIN is not
required under regulations, blank fill.
*Note: U.S. TINs are now required for most recipients. See 2001 Instructions for Form 1042–S.
2001–33 I.R.B.157August 13, 2001

Record Name: Recipient “Q” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
358Recipient’s U.S. TIN 1Required.Enter the recipient’s U.S. TIN type indicator from the follow-
Typeing values:
• 1 = SSN/ITIN
• 2 = EIN
• 3 = QI-EIN
See 2001 Instructions for Form 1042–S for exceptions.
359–398Recipient’s Country of40Required.Enter the complete name of the recipient’s country of resi-
Residence for Tax dence for tax purposes in which the recipient claims residency under that
Purposescountry’s tax law.
399–400Recipient’s Country of2Required.Enter the two-character Country Code for which the
Residence Code for Tax recipient is a resident for tax purposes and on which the tax treaty benefits
Purposesare based. The rate of tax withheld is determined by this code.
401–440NQI/FLW-THR Name 40Provide the complete name of the NQI/FLW-THR Entity. It is very
Line-1important that the complete name of the NQI/FLW-THR entity be provid-
ed. Valid characters are alpha, numeric, ampersand (&), hyphen (-),
comma (,), or blank. Left-justify and blank fill. See note below.
441–480NQI FLW-THR Name 40Enter supplementary information; otherwise enter blanks. Use this line for
Line-2additional names (e.g., partners or joint owners), for trade names, stage
names, aliases or titles. Also use this line for “care of” or “via”. Valid
characters are alpha, numeric, blank, ampersand (&), hyphen (-), comma
(,), and the percent (%). The percent [% (used as “in care of”)] is valid in
the first position only.
481–520NQI/FLW-THR Name 40See above.
Line-3
521–522Reserved 2Enter blanks.
523–562NQI/FLW-THR 40Enter the mailing address of the NQI/FLW-THR entity. Street address
Street Line 1should include number, street, apartment, or suite number (or P.O. Box if
mail is not delivered to street address). Abbreviate as needed. Left-justi-
fy and blank fill.
563–602NQI/FLW-THR 40Enter supplementary NQI/FLW-THR entity street address information;
Street Line 2otherwise; blank fill.
603–642NQI/FLW-THR City40Enter the city or town (or other locality name). Left-justify and blank fill.
643–644Reserved2Enter blanks.
645–646NQI/FLW-THR 2Enter the two-alpha character Province Code abbreviation, if applicable.
Province CodeSee “T” record positions 117–118.
647–648NQI/FLW-THR 2Enter the two-character Country Code abbreviation, where the NQI/FLW-
Country CodeTHR is located.
649–657NQI/FLW-THR9Enter up to nine numeric characters for all U.S. addresses (including
Postal Codeterritories and possessions). Left-justify and zero fill.
658–666NQI/FLW-THR U.S. TIN9Enter the NQI/FLW-THR nine-digit U.S. Taxpayer Identification Number
(TIN). Do NOT enter hyphens or alpha characters.
*Note: All NQI/FLW-THR fields are REQUIRED if the NQI/FLW-THR entity is involved in the payment structure.
667–706Payer’s Name 40Enter the name of the Payer of Income if different from the Withholding
Agent. Abbreviate as needed. If Withholding Agent and Payer are the
same, blank fill.
August 13, 20011582001–33 I.R.B.

Record Name: Recipient “Q” Record (continued)
Field Field TitleLengthDescription and Remarks
Positions
707–715Payer’s U.S. TIN9Enter the Payer’s U.S. Taxpayer Identification Number if there is an entry
in the Payer Name Field; otherwise leave blank.
716–727State Income Tax 12If State Tax has been withheld, enter that amount, in whole dollars (do not
Withheldenter cents). Right-justify and zero fill. If no entry, zero fill.
728–737Payer’s State Tax Number 10Enter the employer’s state I.D. number assigned by the state.
738–739State Code 2Enter the two-character State Code abbreviation.
740–760Special Data Entries21This field may be used for the filer’s own purposes, (e.g., Do Not Mail). If
this field is not used, enter blanks.
761–778Reserved18Enter blanks.
779–780Blank or Carriage Return 2Enter blanks or carriage return line feed (CR/LF) characters.
Line Feed
Recipient “Q” Record Layout
Return Pro Rata
Record
TypeBasis
IncomeGrossWithholdingNetTaxExemption
Type
IndicatorReporting
CodeIncomeAllowanceIncomeRateCode
1234–56–1718–2930–4142–4546–47
RecipientRecipient’s
U.S. Tax Amount
Account
RecipientRecipient’sRecipient’sRecipient’s
Street Line
WithheldRepaid
Number
CodeName Line 1Name Line 2Name Line 3
1
48–5960–7172–9192–9394–133134–173174–213214–253
Recipient’sRecipient’s Recipient’sRecipient’s
Street Line
Recipient’s Recipient’s
Province Country
Postal Zip Recipient’s
U. S. TIN
2
CityState
CodeCode
CodeU. S. TIN
Type
254–293294–333334–335336–337338–339340–348349–357358
Recipient’sRecipient’s
Country ofCountry ofNQI/FLW-THRNQI/FLW-THRNQI/FLW-THR
Residence forResidence CodeName Line 1Name Line 2Name Line 3
Reserved
Tax Purposesfor Tax Purposes
359–398399–400401–440441–480481–520521–522
NQI/FLW-THR NQI/FLW-THRNQI/FLW-THRNQI/FLW-THR
Street Line 1Street Line 2City
Reserved
Province Code
523–562563–602603–642643–644645–646
2001–33 I.R.B.159August 13, 2001

Recipient “Q” Record Layout (continued)
Payer’sPayer’s
NQI/FLW-THRNQI/FLW-THRNQI/FLW-THRPayer’s
U.S.
State Income
State Tax
Country CodePostal CodeU.S. TINName
TIN
Tax Withheld
Number
647–648649–657658–666667–706707–715716–727728–737
State Code
Special Data
Reserved
Blank or Carriage
EntriesReturn Line Feed
738–739740–760761–778779–780
Sec. 9. Reconciliation “C” Record
.01 The “C” Record is a fixed record length of 780 positions and all positions listed are required. The “C” Record is a summary of
the number of “Q” Records for each Withholding Agent, Gross Amount Paid, and Total U.S. Tax Withheld.
.02 This record will be written after the last “Q” Record filed for a given withholding agent. For each “W” Record and group of
“Q” Records on the file, there must be a corresponding “C” Record.
.03 All alpha characters entered in the “C” Record must be upper case.
Record Name: Reconciliation “C” Record
Field Field TitleLengthDescription and Remarks
Positions
1Record Type1Required. Enter “C”.
2–9Total “Q” Records8Required.Enter the total number of “Q” Records for this withholding
agent.
10–15Blank6Enter blanks.
16–30Total Gross Amount Paid15Required.Enter the total gross income amount in whole dollars (do not
enter cents). An income amount other than zero must be shown. Right-
justify and zero fill.
31–45Total U. S. Tax Withheld15Required.Enter the total U.S. Federal tax withheld amount in whole dol-
lars (do not enter cents). Right-justify and zero fill.
46–778Reserved733Blank fill.
779–780Blank or Carriage Return 2Enter blanks or carriage return line feed (CR/LF) characters.
Line Feed
Reconciliation “C” Record Layout
RecordTotal “Q” Total GrossTotal U. S. TaxBlank or Carriage
TypeRecords
Blank
Amount PaidWithheldReservedReturn Line Feed
12–910–1516–3031–4546–778779–780
Sec. 10. End of Transmission “F” Record
.01 The “F” Record is a fixed record length of 780 positions and all positions listed are required. The “F” Record is a summary of
the number of withholding agents and media count in the entire file.
.02 This record will be written after the last “C” Record of the entire file. End the file with an End of Transmission “F” Record.
Only a “C” Record may precede the “F” Record. The “F” Record may only be followed by a tape mark, a trailer label or a combi-
nation of both.
.03 All alpha characters entered in the “F” Record must be upper case.
August 13, 20011602001–33 I.R.B.

Record Name: End of Transmission “F” Record
Field Field TitleLengthDescription and Remarks
Positions
1Record Type1Required.Enter “F”.
2–4Withholding Agent Count3Required.Enter the total number of withholding agents on this file. This
count must be the same as the total number of “W” records. Right-justify
and zero fill.
5–7Media Count3Required.Enter the total number of media for this transmission. Right-
justify and zero fill.
8–778Reserved771Blank fill.
779–780Blank or Carriage 2Required.Enter blanks or carriage return line feed characters (CR/LF).
Return Line Feed
End of Transmission “F” Record Layout
Withholding AgentBlank or Carriage
Record Type
Count
Media CountReserved
Return Line Feed
12–45–78–778779–780
Part C. Electronic Filing Specifications
Sec. 1. Background
01.All electronic filing of information returns are received at IRS/MCC via the FIRE (Filing Information Returns Electronically) Sys-
tem. The FIRE System can be accessed via analog and ISDN BRI connections. The system is designed to support the electronic filing of
information returns only. The telephone number for electronic filing is (304-262-2400). Publications and forms are no longer available
electronically from MCC. Users needing publications and forms will need to download them from the IRS Web Site at www.irs.gov or
order them by calling 1-800-TAX-FORM (1-800-829-3676). IRS/MCC encourages the sending of test files, especially when extensive
changes have occurred in processing procedures, format, or if you have never filed electronically. See Sec. 5 for testing procedures.
Sec. 2. Advantages of Filing Electronically
Some of the advantages of filing electronically are as follows:
(1)Acknowledgment of files received.
(2)Results generally available within 20 workdays as to the acceptability of the data transmitted.
(3)Better customer service due to on-line availability of transmitter’s files for research purposes.
Sec. 3. General
.01Electronic filing of Form 1042–S, originals, corrections, and replacements of information returns 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 withholding agents who are required to file magnetically. It may also be used by
withholding agents who are under the filing threshold requirement, but would prefer to file their information returns electronically.
If the original file was sent magnetically, but IRS/MCC requested a replacement file, the replacement may be transmitted electroni-
cally. Also, if the original file was submitted via magnetic media, any corrections may be transmitted electronically.
.02Files submitted to IRS/MCC electronically must be in standard ASCII code. No magnetic media or paper forms are to be sub-
mitted with the same information as the electronically submitted file.
.03 If a request for an extension is approved, transmitters who file electronically will be granted an extension of time to file. Part
A, Sec. 11, explains procedures for requesting extensions of time. Filers are encouraged to file their data as soon as possible.
.04The formats of the “T”, “W”, “Q”, “C”, and “F” Records are the same for electronically filed records as they are for magnetic
media, and must be in standard ASCII code. For electronically filed documents, each transmission is considered a separate file;
therefore, each transmission mustbegin with a Transmitter “T” Record and end with an End of Transmission (EOT) “F” Record.
2001–33 I.R.B.161August 13, 2001

Sec. 4. Electronic Filing Approval Procedure
.01Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned before submitting their files electronically.
(Filers who currently have a TCC for magnetic media filing of Form 1042–S, beginning with “22”, will not be assigned a second
TCC for electronic filing.) Refer to Part A, Sec. 7, for information on how to obtain a TCC.
.02Once a TCC is obtained, electronic filers assign their own logon name, password and PIN (Personal Identification Number)
and do not need prior or special approval. See Part C, Sec. 7.
.03For all passwords, it is the user’s responsibility to remember the password and not allow the password to be compro-
mised. Passwords are user assigned at first logon and are up to 8 alpha/numerics, which are case sensitive. However, if filers
forget their password or PIN, call 304-263-8700for assistance. The FIRE System requires users to change their passwords on a
yearly basis.
*Note: Passwords are case sensitive.
Sec. 5. Test Files
.01Filers are not required to submit a test file; however, the submission of a test file is encouraged for all new electronic filers to
test hardware and software.If filers wish to submit an electronic test file for Tax Year 2001(returns to be filed in 2002), it mustbe
submitted to IRS/MCC no earlier thanDecember 1, 2001, and no later thanFebruary 15, 2002.
.02If a filer encounters problems while transmitting the electronic test file, contact IRS/MCC for assistance.
.03Filers can verify the status of the transmitted test data by connecting to the electronic filing system at 304-262-2400. This in-
formation will be available within 20 workdays after the transmission is received by IRS/MCC.
.04 Form 4804 is no longer required for test files submitted electronically. See Part C, Sec. 7.
Sec. 6. Electronic Submissions
.01Electronically filed information may be submitted to IRS/MCC 24 hours a day, 7 days a week. Technical assistance will be
available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern time by calling 304-263-8700.
.02 The FIRE System will be down from December 29, 2001, through January 7, 2002. This allows IRS/MCC to update its
system to reflect current year changes.
.03Data compression is encouraged when submitting information returns electronically. WinZip and PKZip are acceptable com-
pression packages. UNIX COMPRESS may be acceptable; however, a test file is recommended to verify compatibility. IRS/MCC
cannot accept self-extracting zip files or compressed files containing multiple files.
The time required to transmit information returns electronically will vary depending on the modem speed and the type of data
compression used, if any. The time required to transmit a file can be reduced by as much as 95 percent by using software compres-
sion and hardware compression.
The following are transmission rates achieved in test uploads at MCC using compressed files. The transmission rates will vary
depending on the modem speeds.
Transmission
Speed in bps1,000 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.
.04Files submitted electronically will be assigned a unique filename by the FIRE System (the users may name files anything
they choose from their end). The filenameassigned by the FIRE Systemwill consist of submission type [TEST, ORIG (original),
CORR (correction), and REPL (replacement)], the filer’s TCC and a four-digit number sequence. The sequence number will be in-
cremented for every file sent. For example, if it is your first original file for the calendar year and your TCC is 22000, the IRS as-
signed filename would be ORIG.22000.0001. Record the filename.
.05If a file was submitted timely and is bad, the filer will receive a letter and listing detailing the reasons a replacement file is
needed. The filer will have up to 45 days to transmit the first replacement file, and 30 days thereafter, if additional replacements are
necessary.
.06 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 only those records that had not previously been submitted.
.07The TCC (beginning with the numbers “22”) in the Transmitter “T” Record must be the TCC used to transmit the file; other-
wise, the file will be considered an error.
August 13, 20011622001–33 I.R.B.

Sec. 7. PIN Requirements
.01 The Form 4804 is not required for electronic files. All new users will be prompted to create a PIN consisting of ten numerics
when they are establishing their initial logon name and password effective 1/1/2002. All users having existing accounts will be
prompted for a PIN assignment the first time they logon after 12/31/2001.
.02 The PIN is required each time you send us a file electronically and is your permission to release the file. If you forget your
PIN, please call us at 304-263-8700.
.03 If the file is good, it is released for mainline processing 20 calendar days from receipt. You may contact us at 304-263-8700
within this 20-day period if there is some reason the file should not be released for further processing. If the file is bad, normal re-
placement procedures are followed.
Sec. 8. Electronic Filing Specifications
.01The FIRE System is designed exclusively for the filing of Forms 1042–S, 1098, 1099, 5498, 8027, W-2G and W-4.
.02A transmitter must have a TCC before a file can be transmitted. A TCC assigned for magnetic media filing that begins with
the numbers “22” should also be used for electronic filing.
.03The results of the electronic transmission will be available in the File Status area of the FIRE System within 20 workdays. It
is the filer’s responsibility to dial back to verify the acceptability of files submitted by checking the File Status area of the system.
These reports will be available on the electronic system in 20 workdays after the transmission is received by IRS/MCC.
.04Connect to the FIRE System by dialing 304-262-2400.This number supports analog connections from 1200bps to 56Kbps
or ISDN BRI 128Kbps. The system can be accessed via Dial-up network/web browser (see Part C, Sec. 9)or communications soft-
ware (see Part C, Sec. 10). The Dial-up network/web browser (point-to-point) will provide an Internet-like look, however, it is not
the Internet. If you do not have this capability, a text interface is provided that can be accessed via communication software such as
Hyperterminal, Procomm, PCAnywhere, etc.
Sec. 9. Dial-up Network/Browser Specifications (Web Interface)
.01The following are some general instructions (many of these may already be set by default in your software):
Dial-up network settings:
(a) Set dial-up server type to PPP
(b) Set network protocol to TCP/IP
(c) Disable software compression
(d) Disable PPP-LCP extensions
Browser settings:
(a)Browser must be capable of file uploads (i.e., Internet Explorer 4.0, Netscape 2.0 or higher)
(b)Enter the URLaddress of http://10.225.224.2after you have connected via dial-up. (Remember, this is a point-to-point
connection, not the Internet.)
.02Due to the large number of communication products available, it is impossible to provide specific information on all soft-
ware/hardware configurations. However, since most filers use Windows 95, 98, NT, 2000, or ME software or more current versions,
the following instructions are geared toward those products:
UPLOADING FILES WITH DIAL-UP NETWORKING/WEB BROWSER IN WINDOWS 95/98/NT/2000/ME
Tips
(1) This is a point-to-point connection – not the Internet.
(2) Your browser must be capable of file uploads, i.e., Internet Explorer 4.0 or Netscape Navigator 2.0 or higher.
(3) If you currently access the Internet via a LAN or a PROXY server, you will need to disable those options in your browser and en-
able ‘Connect to the Internet using a modem’.
SelectPrograms
Accessories
Communications (Windows 98)
Dial-Up Networking
First time connecting with Dial-Up Network
(If you have logged on previously, skip to Subsequent Dial-up Network Con-
nections.)
The first time you dial-in, you will need to configure your Dial-Up Networking.
Select ‘Make new connection’.
Type a descriptive name for the system you are calling.
2001–33 I.R.B.163August 13, 2001

Select your modem.
Click ‘Next’.
Enter area code 304 and telephone number262-2400.
Click ‘Next’.
When you receive a message that, you have successfully created a new Dial-Up Networking connection, click‘Finish’.
Click ‘Connect’to dial. If you are prompted for a user name and password, complete according to local procedures; oth-
erwise, click ‘OK’.
When you receive the message that you have connected to our system, click on your Web Browser (remember, it is not
connecting via the Internet – this is a point-to-point connection).
In the URL Address enter http://10.225.224.2and press ENTER.
Subsequent Dial-Up Network connections
Click ‘Connect’.
If prompted for user name and password, complete according to local
procedures; otherwise, click ‘OK’.
When you receive ‘Connection Complete’, click ‘OK’.
Click on your Web Browser (remember, you are not connecting via the Internet).
In the URL Address enter http://10.225.224.2and press ENTER.
First time connection to the FIRE System(If you have logged on previously, skip to Subsequent Connections to the FIRE
System.)
Click ‘Create New Account’.
Fill out the registration form and click ‘Create’.
Enter your logon name(most users logon with their first and last name).
Enter your password(the password is user assigned and is case sensitive).
Click ‘Create’.
If you receive the message ‘account created’, click ‘OK’.
Click ‘Start the Fire Application’.
Subsequent connections to the FIRE System
Click ‘Log On’.
Enter yourlogon name(most users logon with their first and last name).
Enter your password(the password is user assigned and is case sensitive).
At Menu Options:
Click ‘Information Returns’
Enter your TCC:
Enter your EIN:
Click ‘Submit’.
The system will then display the company name, address, city, state, ZIP code, contact and telephone number. This infor-
mation will be used to contact or send any correspondence regarding this transmission. Update as appropriate and/or click
‘Accept’.
Click one of the following:
Original File
Correction File
Test File
Replacement File(if you select this option, select one of the following):
FIRE Replacement(file was originally transmitted on this system)
Click file to be replaced
or
Magnetic Media Replacement File
Enter the alpha character from Form 9267, Media Tracking Slip, that was returned with the correspon-
dence requesting a replacement file.
Click ‘Submit’.
Enter the drive/path/filename of the file you want to upload or click ‘Browse’to locate the file.
Click ‘Upload’.
August 13, 20011642001–33 I.R.B.

When the upload is complete, the screen will display the total bytes received and the IRS assigned file name.
If you have more files to upload for that TCC:
Click ‘File Another’; otherwise,
Click ‘Back to Main Menu’.
It is your responsibility to check the acceptability of your file; therefore, be sure to dial back into the system in 20 business days.
To check the acceptability of a previously submitted file:
At the Main Menu:
Click ‘File Stats’.
Enter your TCC:
Enter your EIN:
Click‘Search’.
If ‘Results’ indicate:
‘File Good’and you agree with the ‘Count of Payees’, you are finished with this file. (If you do not want the file processed,
you must contact IRS/MCC within 10 days.)
‘File Bad’- Correct the errors and resubmit the file as a ‘replacement’.
‘Not Yet Processed’- File has been received, but we do not have results available yet. Please check back in a few days.
Click on the desired file for a detailed report of your transmission.
When finished viewing your files, click on ‘Main Menu’.
Click ‘Log Off’.
Close your Web Browser.
IMPOR
TANT
Go back into your Dial-Up Network and click ‘hang-up’; otherwise, you may stay connected and incur unnecessary tele-
phone charges.
Sec. 10. Communication Software Specifications (Text Interface)
.01Communications software settings must be:
- No parity
- Eight data bits
- One stop bit
.02 Terminal Emulation must be VT100.
.03Due to the large number of communication products available, it is impossible to provide specific information on all
software/hardware configurations. However, since most of our filers use Windows 95, 98 or NT software, the follow-
ing instructions are geared toward those products (Procomm, PCAnywhere and many other communications pack-
ages are also acceptable and the product does not necessarily need to be Windows based.):
Uploading Files Using Hyper
terminal in Windows 95, 98 or NT
SelectPrograms
Accessories
Communications (Windows 98)
Hyperterminal
The first time you log on, select Hyperterminal, Hyperterm,or Hyperterm.exe, whichever is available on your system.
Thereafter, you can just select the icon that you have saved.
A box will appear titled ‘Connection Description’.
Enter a name and choose an iconfor the connection:
Country Code: United States of America
Area Code: 304
Phone Number: 262-2400
Connect Using: (default)
(If you need to modify the phone number, select File,then Propertiesto enter defaults for the area code, phone
numbers, and/or special access codes.)
Click on ‘Dial’.
2001–33 I.R.B.165August 13, 2001

A ‘Connect’ box will appear to show the status.
Once you have connected to the FIRE System, if you do not get a menu within a few seconds, press the ENTER
key one time.
First Time Logon
When you have connected to the system, enter ‘new’ to create your logon name and password.
Complete the registration information and enter ‘y’ to create account.
Logon Name and Password
Logon Name: Enter a logon name. Most users enter their first and last name as the logon name.
Password: Enter a password of your choosing (1-8 alpha/numerics - case sensitive).
After entering the password, you will go to the Main Menu.
Transferring Your
Electronic File
Enter ‘A’for Electronic Filing.
After reading Information Notice, pressENTER.
Enter ‘A’ for Forms 1098, 1099, 5498, W-2G, 1042-S, 8027, and Questionable Forms W-4.
Press the Tab key to advance to TCC box; otherwise, enter ‘E’ to exit.
Enter your TCC:
Enter your EIN:
The system will then display the company name, address, city, state, ZIP code, and phone number. This information will be
used to contact or send correspondence (if necessary) regarding this transmission. If you need to update, enter ‘n’ to change
information; otherwise, enter ‘y’ to accept.
Select one of the following:
‘A’ for an Original file
‘B’ for a Replacement file
‘C’ for a Correction file
‘D’ for a Test file
If you selected ‘B’ for a replacement file, select one of the following:
‘A’ Replacement Files For This System
This option is to replace an original/correction file that was submitted electronically on this system but was bad and
needs to be replaced. Select the file needing replaced.
‘B’ Magnetic media replacement files
Enter the alpha character from Form 9267, Media Tracking Slip, that was returned with the correspondence request-
ing a replacement file.
Choose one of the following protocols (Hyperterminal is normally set to Zmodem by default):
X- Xmodem
Y- Ymodem
Z- Zmodem (Zmodem will normally give you the fastest transfer rate.)
At this point, you must start the upload from your PC.
To send a file:
Go to the hyperterminal menu bar.
Click on Transfer.
Click on Send file.
A box will appear titled ‘Send File’.
Enter the drive/path/filename or click on Browseto locate your file.
Click on Send.
When the upload is complete, the screen will display the total bytes received and the IRS assigned file name.
Press ENTERto continue.
If you have more files to send for the same TCC/EIN, enter ‘y’; otherwise, enter ‘n’.
It is your responsibility to check the acceptability of your file; therefore, be sure to dial back into the system in 20 business days.
August 13, 20011662001–33 I.R.B.

To check the acceptability of a previously submitted file:
At the Main Menu:
Enter ‘B’ for file status.
Press the Tab key to advance to TCC box; otherwise, enter ‘E’ to exit.
Enter your TCC:
Enter your EIN:
Choose the appropriate option.
Tab to appropriate file and press ENTER.
If ‘Results’ indicate:
‘File Good’and you agree with the ‘Count of Payees’, you are finished with this file. (If you do not want the file processed,
you must contact IRS/MCC within 10 days.)
‘File Bad’- Correct the errors and resubmit the file as a replacement.
‘Not Yet Processed’- File has been received, but results are not available. Please recheck in several days.
When you are finished, enter ‘E’ from the ‘Main Menu’ to logoff.
Enter ‘2’ to hang-up.
Sec. 11. Modem Configuration
.01Hardware features
(a)Enable hardware flow control
(b)Enable modem error control
(c)Enable modem compression
Sec. 12. Common Problems Associated with Electronic Filing
.01Refer to Part A, Section 18, for Major Problems Encountered with Form 1042–S magnetic/electronic files.
.02The following are the major non-format errors associated with electronic filing:
1. Transmitter does not dial back to the electronic system to determine file acceptability.
The results of your file transfer are posted to the FIRE System within 20 business days. It is your responsibility to verify file accept-
ability and, if the file contains errors, you can get an online listing of the errors. Date received and number of payee records are also
displayed. (If you do not want the file processed, you must contact IRS/MCC within 10 days.)
2. Transmitter uses wrong TCC.
Use the TCC assigned for Form 1042–S filing only. This TCC will begin with a “22”.
3. Transmitter compresses several files into one.
Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and send 10
separate compressed files.
4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement or
correction file to replace the original/correction/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad (20 business days after
file was transmitted). 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 possibil-
ity. However, this will count as a replacement. (See Part A, Sec. 16, for the definition of replacement.)
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 is formatted as EBCDIC.
All files submitted electronically must be in standard ASCII code.
.03The following are the most common problems associated with connecting with dial-up networking/web browser:
1. Transmitter is unable to connect to the FIRE System using dial-up networking.
1. The user name and password should be blank when trying to connect unless it is needed for your system.
2001–33 I.R.B.167August 13, 2001

2. Windows 95/98: Disable ‘enable software compression’.
3. Windows NT/2000: Disable both ‘enable software compression’ and ‘enable PPP/LCP extensions’.
4. TCP/IP should be the only network protocol that is enabled.
(Make sure you are using analog lines rather than digital.)
2. Transmitter is connecting using dial-up networking, but is unable to bring up the URL address using my web browser.
1. Proxy server should be disabled for a dial-up connection.
2. Using a modem option should be selected.
3. The home page should either display http://10.225.224.2or be set to ‘about:blank’.
4. The security level should be set at medium.
5. The option ‘enable software compression’ should be disabled under Dial-Up Networking.
3. Transmitter clicks on ‘start the FIRE application’, but the logon screen is displayed again.
Your browser must be set to receive ‘cookies’.
4. Transmitter is getting a menu when connecting with dial-up networking.
The option ‘pop-up a terminal window’ should be disabled.
5. Transmitter cannot find the browse button to upload file.
If using Internet Explorer, you must have version 4.0 or higher. If using Netscape Navigator, it must be version 2.0 or higher. A
patch is available that can be downloaded from Microsoft for users of Internet Explorer 3.02.
6. The line is busy when dialed.
We have enough lines available that you should not get this message. Check the phone number being dialed. It should be 304-262-
2400. If you need a number such as an 8 or a 9 to access an outside line, make sure it is present. Also, some companies require an
access code for long distance dialing.
7. Transmitter is receiving the error message “Remote PPP Peer Not Responding.”
Disable ‘enable PPP/LCP Extensions’ in Dial-Up Networking
.04The following are the most common problems associated with connecting with hyperterminal:
1. Transmitter is unable to connect using hyperterminal.
1. If you need a number such as an 8 or a 9 to access an outside line, make sure it is present.
2. Set the terminal emulation to VT100.
3. Try lowering the modem speed.
4. Turn the modem off and then back on to reset it.
Make sure you are using analog lines rather than digital.
2. Transmitter is getting the message ‘annex command line interpreter.’
Disconnect and try again. You may need to lower the modem speed if this happens several times in a row.
3. When trying to logon, the cursor is not in the correct box, or the menus are distorted.
Check the terminal emulation. It must be set to VT100. Also, verify that the data bits are set at 8, the stop bit is set at 1 and pari-
ty is set at None.
4. Transmitter was able to connect and the menu is displayed, but is unable to type anything.
Scroll lock cannot be turned on.
5. When transmitter connects, the menus keep scrolling and display garbage characters.
Make sure ‘Use error control’ and ‘Compress data’ are enabled under the Advanced Connection Settings.
6. Transmitter receives message saying ‘bad data packet’ when the file is transmitting. What does this mean?
Your modem is having problems sending the data, so it is re-trying to send it. Normally, if the transfer does not abort, the file will
be sent successfully.
August 13, 20011682001–33 I.R.B.

Part D. Magnetic/Electronic Specifications For Extensions of Time
Sec. 1. General
.01The specifications in Part D include the required 200-byte record format for extensions of time to file requests submitted mag-
netically or electronically. Also included are the instructions for the information that is to be entered in the record. Filers are ad-
vised to read this section in its entirety to ensure proper filing.
.02Only filers who have been assigned a Transmitter Control Code may request an extension of time magnetically or electroni-
cally. If you meet the threshold of more than 50 withholding agents when requesting an extension but are below the 250 documents
threshold, you must still submit a Form 4419, Application for Filing Information Returns Magnetically/Electronically. Requests for
extensions of time may be made for Forms 1098, 1099, 5498, W-2G, W-2, 1042–S and 8027.
.03For Tax Year 2001(returns due to be filed in 2002), transmitters requesting an extension of time to file for more than 50 with-
holding agents (not recipients) are required to file the extension request magnetically or electronically. Transmitters requesting an
extension of time for 10 to 50 withholding agents (not recipients) are encouraged to file the request magnetically or electronically.
The request may be filed on tape, tape cartridge, 3 1/2-inch diskette, or electronically.
.04 For extension requests filed on magnetic media, the transmitter must mail the completed, signed Form 8809, Request for Ex-
tension of Time To File Information Returns, in the same package as the corresponding media or fax it to 304-264-5602. For exten-
sion requests filed electronically, the transmitter must fax the Form 8809 the same day the transmission is made.
.05Transmitters submitting an extension of time magnetically or electronically should not submit a list of withholding agents
names and TINs with the Form 8809 since this information is included on the magnetic or electronic file. However, Line 6 of the
Form 8809 must be completed with the total number of records included on the magnetic media or electronic file.
.06To be considered, an extension request must be postmarked or transmitted by the due date of the returns; otherwise, the re-
quest will be denied.
.07A magnetically-filed request for an extension of time should be sent using the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
*Note: Due to the large volume of mail received by IRS/MCC and the time factor involved in processing the Form 8809, it is
imperative that the attention line be present on all envelopes or packages containing Extension of Time (EOT) requests.
.08Requests for extensions of time to file postmarked by the United States Postal Service on or before the due date of the returns,
and delivered by United States mail to the IRS/MCC after the due date, are treated as timely under the “timely mailing as timely fil-
ing” rule. A similar rule applies to designated private delivery services (PDSs). See Part A, Sec. 10, for more information on PDSs.
For requests delivered by a designated PDS, but through a non-designated service, the actual date of receipt by IRS/MCC will be
used as the filing date.
.09Transmitters who submit their extension of time requests magnetically or electronically will receive a letter from IRS/MCC
with an attached list of the withholding agents, based on information contained in the file, specifying approval and/or denial.
.10Do not submit tax year 2001 extensions of time to file requests on magnetic media before January 1, 2002,or electronically
before January 8, 2002.
.11It will take a minimum of 30 days for IRS/MCC to respond to an extension request. Under certain circumstances, a request for
an extension of time could be denied. In such cases, the transmitter receives a denial letter. When this denial letter is received, the
transmitter has 20 days to provide the additional or necessary information and resubmit the extension request to IRS/MCC.
.12Each piece of magnetic media musthave an external media label containing the following information:
(a)Transmitter name
(b)Transmitter Control Code (TCC)
(c) Tax year
(d)The words “Extension of Time”
(e) Record count
.13A request for an extension of time to file is not automatically granted. Approval or denial is dependent on information pro-
vided on the Form 8809. If the Form 8809 is not completed properly, processing may be delayed or the request may be denied.
.14If the first request for an extension of time to file was submitted magnetically or electronically, additional extension requests
should be submitted in the same manner.
.15If an additional extension of time is needed, a second Form 8809 and file may be submitted before the end of the initial ex-
tension period with a postmark reflecting the date mailed. Line 7 on the form should be checked to indicate that the original exten-
sion has been received and the additional extension is being requested.
.16See Part A, Sec. 11, for complete information on requesting an extension of time to file information returns. If there are addi-
tional questions or concerns, contact IRS/MCC.
2001–33 I.R.B.169August 13, 2001

Sec. 2. Magnetic Tape, Tape Cartridge, 8mm, 4mm, and QIC (Quarter-Inch Cartridge), 3 1/2-inch
Diskette and Electronic Specifications
*Note: Beginning in calendar year 2003 for Tax Year 2002, IRS/MCC will no longer process 9- track tapes
.01Tape specifications are as follows:
(a)9-track.
(b)EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information Inter-
change) recording mode.
(c)1600 or 6250 BPI.
(d)A block must not exceed 32,600 tape positions and must be a multiple of 200.
(e) Record length of 200 bytes.
(f)Labeled or unlabeled tapes may be submitted.
.02Tape cartridge specifications are as follows:
(a)Must be IBM 3480, 3490, 3590, 3590Eor 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 will be 18-track or 36-track parallel. Indicate on the external media label if the tape cartridge is 18- or
36- track.
(4)Mode will be full function.
(5)The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(6)Either EBCDIC or ASCII.
(c) A block must not exceed 32,600 tape positions and must be a multiple of 200.
(d)Record length of 200 bytes.
(e)Labeled or unlabeled tape cartridges may be submitted.
.038mm, 4mm, and Quarter-Inch Cartridge Specifications:
(a)In most instances, IRS/MCC can process 8mm tape cartridges that meet the following specifications:
(1) Must meet American National Standard Institute (ANSI) standards, and have the following characteristics:
(a)Created from an AS400 operating system only.
(b)8mm (.315-inch) tape cartridges will be 2 1/2-inch by 3 3/4-inch.
(c)The 8mm tape cartridges must meet the following specifications:
TracksDensityCapacity
120 (43245 BPI)2.3Gb
121 (45434 BPI)5 Gb
(d)Mode will be full function.
(e) Compressed data is not acceptable.
(f)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Informa-
tion Interchange) may be used. However, IRS/MCC encourages the use of EBCDIC. This information must appear
on the external media label affixed to the cartridge.
(g)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, IRSEOT, will contain a three digit extension. The extension will indicate
the sequence of the cartridge within the file, 1 of 3, 2 of 3, or 3 of 3, and will appear in the header label IRSEOT.001,
IRSEOT.002, and IRSEOT.003 on each cartridge of the file.
(2) The 8mm (.315-inch) tape cartridge records defined in this Revenue Procedure may be blocked subject to the following:
(a) A block must not exceed 32,600 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 a
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 di-
visible by 200.
(d) Various SAVE commands have been successful; however, the SAVE OBJECT COMMAND is not acceptable.
(e) Records may not span blocks.
*Note: Advanced Metal Evaporated (AME) cartridges are not acceptable.
August 13, 20011702001–33 I.R.B.

(3)For faster processing, IRS/MCC encourages transmitters to use header labeled cartridges. IRSEOT may be used as a sug-
gested filename.
(4)For the purposes of this Revenue Procedure, the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
(5)IRS/MCC can only read one data file on a tape. A data file is a group of records which may or may not begin with a tape-
mark, but must end with a trailer label. Any data beyond the trailer label cannot be read by IRS programs.
(b)4mm (.157-inch) cassettes are now acceptable with the following specifications:
(1)4mm cassettes will be 2 1/4-inch by 3-inch.
(2)The tracks are 1 (one).
(3)The density is 19 (61000 BPI).
(4) The typical capacity is DDS (DAT data storage) at 1.3 Gb or 2 Gb, or DDS-2 at 4 Gb.
(5) The general specifications for 8mm cartridges will also apply to the 4mm cassettes.
*Note: 4mm cassettes with a capacity of DDS-3 (125 meter) are not acceptable.
(c)Various Quarter-Inch Cartridges (QIC) (1/4-inch) are also acceptable.
(1) QIC cartridges will be 40by 60.
(2)QIC cartridges must meet the following specification:
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
(3)The general specifications that apply to 8mm cartridges will also apply to QIC cartridges.
.04Diskette specifications are as follows:
(a)3 1/2-inches in diameter.
(b)ASCII recording mode only. Additional specifications may be found in Part B, Sec. 5, of this Revenue Procedure.
(c)Record length of 200 bytes.
(d) Diskettes must be created using the MS-DOS operating system.
(e) Filename of IRSEOT must be used. No other filenames are acceptable. If a file will consist of more than one diskette,
the filename IRSEOT will contain a three-digit extension. This extension will indicate the sequence of the diskettes
within the file. For example, the first diskette will be named IRSEOT.001, the second diskette will be name
IRSEOT.002, etc.
(f)Delimiter character commas (,) or quotes (”) must not be used.
(g)Positions 199 and 200 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applica-
ble.
.05 Electronic Filing specifications (See Note.)
(a) A transmitter must have a Transmitter Control Code (TCC).
(b) Filers can determine the acceptability of files submitted by checking the file status area of the system. These reports will
be available on the electronic system within 5 business days if the Form 8809 is received timely by IRS/MCC.
*Note: See Part C, Electronic Filing Specifications, for detailed information on filing with IRS/MCC electronically.
Sec. 3. Record Layout
.01Positions 6 through 185 of the following record should contain information about the withholding agent for whom the exten-
sion of time to file is being requested. Do not enter transmitter information in these fields. Only one TCC may be present in a file.
Record Layout for Extension of Time
Field Field TitleLengthDescription and Remarks
Positions
1–5 Transmitter5Required.Enter the five-digit Transmitter Control Code (TCC) issued
Control Codeby IRS. Only one TCC per file is acceptable.
2001–33 I.R.B.171August 13, 2001

Record Layout for Extension of Time (continued)
Field Field TitleLengthDescription and Remarks
Positions
6–14 Withholding9Required.Must be the valid nine-digit EIN/SSN assigned to the with-
Agent’s TINholding agent. Do not enter blanks, hyphens or alpha characters.All
zeros, ones, twos, etc., will have the effect of an incorrect TIN. For foreign
entities that are not required to have a TIN, this field may be blank; how-
ever, the Foreign Entity Indicator, position 187, mustbe set to “X.”
15–54Withholding40Required.Enter the name of the withholding agents whose TIN appears
Agent’s Name in positions 6–14. Left-justify information and fill unused positions with
blanks.
55–94Second Agent’s 40If additional space is needed, this field may be used to continue name line
Nameinformation (e.g., c/o First National Bank); otherwise, enter blanks.
95–134Withholding 40Required.Enter the agent’s address. Street address should include number,
Agent’s Addressstreet, apartment or suite number (or P.O. Box if mail is not delivered to a
street address).
135–174Withholding40Required.Enter agent’s city, town, or post office.
Agent’s City
175–176Withholding2Required.Enter the agent’s valid U.S. Postal Service state abbreviation.
Agent’s State (Refer to Part A, Sec. 18.)
177–185Withholding9Required.Enter agent’s ZIP Code. If using a five-digit ZIP Code, left-
Agent’s ZIPjustify information and fill unused positions with blanks.
Code
186Document1Required.Enter the document for which you are requesting an extension
Indicatorof time using the following code:
Code Document
4 1042–S
DO NOT enter any other values in this field when requesting an extension for Form 1042–S.
187Foreign1Enter character “X” if the payer is a foreign entity.
Entity Indicator
188–198Blank11Enter blanks.
199–200Blank2Enter blanks.Diskette filers may code the ASCII carriage return/line feed
(CR/LF) characters.
Extension of Time Record Layout
TransmitterWithholdingWithholding
Second
WithholdingWithholdingWithholding
ControlAgent’sAgent’s
Withholding
Agent’sAgent’sAgent’s State
Code TINName
Agent’s
AddressCity
Name
1–56–1415–5455–94 95–134135–174 175–176
Withholding
Foreign
Agent’sDocument
EntityBlank
Blank
ZIPIndicator
Indicator
or CR/LF
Code
177–185186187 188–198199–200
August 13, 20011722001–33 I.R.B.

Part E. Miscellaneous Information
Sec. 1. Addresses for Martinsburg Computing Center
To submit an application to file, correspondence, and magnetic media files, use the following:
IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
To submit magnetically filed and paper extension and waiver requests, use the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
Sec. 2. Telephone Numbers for Contacting IRS
&
Between 8:30 a.m. and 4:30 p.m. Eastern Time
Monday through Friday
Information Reporting Program Call Site: 304-263-8700 or email at mccirp@irs.gov
Telecommunication Device for the Deaf (TDD): 304-267-3367
HOURS OF OPERATION– FIRE SYSTEM & FAX
24 HOURS A DAY
7 DAYS A WEEK
Electronic Filing via the FIRE System: 304-262-2400
Information Returns FAX Machine: 304-264-5602
Tax law inquiries concerning Chapter 3 Withholding: 215-516-2000
This is the end of Publication 1187 for Tax Year2001.
2001–33 I.R.B.173August 13, 2001
26 CFR 601.05: Examination of returns and claims
for refund, credit, or abatement; determination of
correct tax liability.
Rev. Proc. 2001–41
SECTION 1. PURPOSE
.01 This revenue procedure modifies
Rev. Proc. 2001–2 (2001–1 I.R.B. 79) to
clarify that Technical Advice will not be is-
sued on frivolous issues and to provide a
procedure for expedited review of denials of
Technical Advice where the taxpayer re-
quests Technical Advice on frivolous issues.
SECTION 2. MODIFICATIONS
.01 Section 3 of Rev. Proc. 2001–2, On
What Issues May Technical Advice be
Requested Under This Procedure, is mod-
ified by the addition of subsection .03
below, which provides that technical ad-
vice will not be issued on frivolous issues.
Technical advice will not be issued
on frivolous issues. For purposes of
this program, a “frivolous issue” is
one without basis in fact or law, or
that espouses a position which has
been held by the courts to be frivo-
lous or groundless. Examples of
frivolous or groundless issues in-
clude, but are not limited to:
1. frivolous “constitutional”
claims, such as claims that the re-
quirement to file tax returns and pay
taxes constitutes an unreasonable
search barred by the Fourth Amend-
ment; violates Fifth and Fourteenth
Amendment protections of due
process; violates Thirteenth
Amendment protections against in-
voluntary servitude; or is unen-
forceable because the Sixteenth
Amendment does not authorize
nonapportioned direct taxes or was
never ratified;
2. claims that income taxes are vol-
untary, that the term “income” is
not defined in the Internal Revenue
Code, or that preparation and filing
of income tax returns violates the
Paperwork Reduction Act;
3. claims that tax may be imposed
only on coins minted under a gold
or silver standard or that receipt of
Federal Reserve Notes does not
cause an accretion to wealth;
4. claims that a person is not tax-
able on income because he or she
falls within a class entitled to “repa-

August 13, 20011742001–33 I.R.B.
ration claims” or an extra-statutory
class of individuals exempt from
tax, e.g., “free-born” individuals;
5. claims that a taxpayer can refuse
to pay taxes on the basis of opposi-
tion to certain governmental expen-
ditures;
6. claims that taxes apply only to
federal employees; only to residents
of Puerto Rico, Guam, the U.S. Vir-
gin Islands, the District of Colum-
bia, or “federal enclaves”; or that
the Internal Revenue Code imposes
taxes on U.S. citizens and residents
only on income derived from for-
eign based activities;
7. claims that wages or personal
service income are not “income,”
are “nontaxable receipts,” or “are a
nontaxable exchange for labor;” or
8. other claims the courts have
characterized as frivolous or
groundless.
.02 Section 11 of Rev. Proc. 2001–2,
How Does a Taxpayer Appeal a Director’s
or Area Director, Appeals’, Decision not
to Seek Technical Advice, is modified by
adding subsection .05 below, which pro-
vides for expedited review procedures
where the denial of technical advice is be-
cause the requested advice concerns friv-
olous issues.
Special procedures applicable to ap-
peals regarding frivolous issues. If
the request for technical advice con-
cerns a “frivolous issue,” as de-
scribed in Section 3.03 of this Rev-
enue Procedure, technical advice
will not be given, and the examin-
ing officer or appeals officer will
deny the taxpayer’s request for re-
ferral. The taxpayer may appeal the
decision of the examining officer or
the appeals officer; however, if the
territory manager or area director,
appeals, determines that no techni-
cal advice will be sought, an expe-
dited review procedure will be fol-
lowed.
This expedited review procedure
will consist of the following: 1) the
territory manager or area director,
appeals, will inform the appropriate
official described in section 11.04
above (the Industry Director,
LMSB; the Director, Field Compli-
ance, SB/SE; the Director, Compli-
ance, W&I; the Director, Interna-
tional, LMSB; the Director,
Federal, State, and Local Govern-
ments; the Director, Tax Exempt
Bonds; the Director, Indian Tribal
Governments; or the Chief, Ap-
peals) of the request for review and
the basis for the denial, but will not
forward the taxpayer’s written re-
quest and statements, unless re-
quested to do so by the official; 2)
the field office or area office will
not suspend action on the issue; 3)
within 15 days, the official will no-
tify the territory manager or area di-
rector, appeals, whether the pro-
posed denial is approved or
disapproved. The official may also
determine that the expedited
process is not warranted and request
all of the information supplied by
the taxpayer and allow suspension
of action on the item while the de-
nial is reviewed; and 4) the field of-
fice or area office will then notify
the taxpayer of the result of the re-
view of the denial.
SECTION 3. EFFECTIVE DATE
This revenue procedure is effective July
23, 2001, the date this revenue procedure
was released to the news media.
SECTION 4. DRAFTING
INFORMATION
The principal author of this revenue pro-
cedure is George Bowden of the Office of
the Associate Chief Counsel (Procedure
& Administration). For further informa-
tion regarding this revenue procedure,
contact Mr. Bowden at 202-622-3400 (not
a toll-free call).

2001–33 I.R.B.175August 13, 2001
Deletions From Cumulative List
of Organizations Contributions
to Which are Deductible Under
Section 170 of the Code
Announcement 2001–81
The name of an organization that no
longer qualifies as an organization de-
scribed in section 170(c)(2) of the Internal
Revenue Code of 1986 is listed below.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an orga-
nization ceases to qualify under section
170(c)(2) if the organization has not
timely filed a suit for declaratory judg-
ment under section 7428 and if the con-
tributor (1) had knowledge of the revoca-
tion of the ruling or determination letter,
(2) was aware that such revocation was
imminent, or (3) was in part responsible
for or was aware of the activities or omis-
sions of the organization that brought
about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed, con-
tributions from individuals and organiza-
tions described in section 170(c)(2) that
are otherwise allowable will continue to
be deductible. Protection under section
7428(c) would begin on August 13, 2001,
and would end on the date the court first
determines that the organization is not de-
scribed in section 170(c)(2) as more par-
ticularly set forth in section 7428(c)(1).
For individual contributors, the maximum
deduction protected is $1,000, with a hus-
band and wife treated as one contributor.
This benefit is not extended to any indi-
vidual, in whole or in part, for the acts or
omissions of the organization that were
the basis for revocation.
WorldCare, Inc.
La Mesa, CA
Section 7428(c) Validation of
Certain Contributions Made
During Pendency of Declaratory
Judgment Proceedings
This announcement serves notice to po-
tential donors that the organization listed
below has recently filed a timely declara-
tory judgment suit under section 7428 of
the Code, challenging revocation of it’s
status as an eligible donee under section
170(c)(2).
Protection under section 7428(c) of the
Code begins on the date that the notice of
revocation is published in the Internal
Revenue Bulletin and ends on the date on
which a court first determines that an or-
ganization is not described in section
170(c)(2), as more particularly set forth in
section 7428(c)(1). In the case of individ-
ual contributors, the maximum amount of
contributions protected during this period
is limited to $1,000.00, with a husband
and wife being treated as one contributor.
This protection is not extended to any in-
dividual who was responsible, in whole or
in part, for the acts or omissions of the or-
ganization that were the basis for the re-
vocation. This protection also applies
(but without limitation as to amount) to
organizations described in section
170(c)(2) which are exempt from tax
under section 501(a). If the organization
ultimately prevails in its declaratory judg-
ment suit, deductibility of contributions
would be subject to the normal limitations
set forth under section 170.
Career Guidance Foundation
San Diego, CA
Part IV. Items of General Interest

August 13, 2001i2001–33 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 de-
scribe 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 Contributions 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 Procedural 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

2001–33 I.R.B.iiAugust 13, 2001
Numerical Finding List
1
Bulletins 2001–27 through 2001–32
Announcements:
2001–69, 2001–27 I.R.B. 23
2001–70, 2001–27 I.R.B. 23
2001–71, 2001–27 I.R.B. 26
2001–72, 2001–28 I.R.B. 39
2001–73, 2001–28 I.R.B. 40
2001–74, 2001–28 I.R.B. 40
2001–75, 2001–28 I.R.B. 42
2001–76, 2001–29 I.R.B. 67
2001–77, 2001–30 I.R.B. 83
2001–78, 2001–30 I.R.B. 87
2001–79, 2001–31 I.R.B. 97
2001–80, 2001–31 I.R.B. 98
2001–82, 2001–32 I.R.B. 123
Court Decisions:
2070, 2001–31 I.R.B. 90
Notices:
2001–39, 2001–27 I.R.B. 3
2001–41, 2001–27 I.R.B. 2
2001–42, 2001–30 I.R.B. 70
2001–43, 2001–30 I.R.B. 72
2001–44, 2001–30 I.R.B. 77
2001–46, 2001–32 I.R.B. 122
Proposed Regulations:
REG–106917–99, 2001–27 I.R.B. 4
REG–100548–01, 2001–29 I.R.B. 67
Railroad Retirement Quarterly Rates:
2001–27, I.R.B. 1
Revenue Procedures:
2001–30, 2001–29 I.R.B. 46
2001–39, 2001–28 I.R.B. 38
Revenue Rulings:
2001–33, 2001–32 I.R.B. 118
2001–34, 2001–28 I.R.B. 31
2001–35, 2001–29 I.R.B. 59
2001–36, 2001–32 I.R.B. 119
2001–37, 2001–32 I.R.B. 100
Treasury Decisions:
8947, 2001–28 I.R.B. 36
8948, 2001–28 I.R.B. 27
8949, 2001–28 I.R.B. 33
8950, 2001–28 I.R.B. 34
8951, 2001–29 I.R.B. 63
8952, 2001–29 I.R.B. 60
8953, 2001–29 I.R.B. 44
8954, 2001–29 I.R.B. 47
8955, 2001–32 I.R.B. 101
8956, 2001–32 I.R.B. 112
1
A cumulative list of all revenue rulings, revenue
procedures, Treasury decisions, etc., published in
Internal Revenue Bulletins 2001–1 through 2001–26
is in Internal Revenue Bulletin 2001–27, dated July
2, 2001.

August 13, 2001iii2001–33 I.R.B.
Finding List of Current Actions on
Previously Published Items
1
Bulletins 2001–27 through 2001–32
Announcements:
2000–48
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
Notices:
2001–4
Modified by
Notice 2001–43, 2001–30 I.R.B. 72
2001–9
Modified by
Notice 2001–46, 2001–32 I.R.B. 122
Proposed Regulations:
LR–97–79
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
LR–107–84
Withdrawn by
REG–100548–01, 2001–29 I.R.B. 67
REG–107186–00
Corrected by
Ann. 2001–71, 2001–27 I.R.B. 26
Revenue Procedures:
97–13
Modified by
Rev. Proc. 2001–39, 2001–28 I.R.B. 38
2000–20
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
2000–39
Corrected by
Ann. 2001–73, 2001–28 I.R.B. 40
2001–6
Modified by
Notice 2001–42, 2001–30 I.R.B. 70
Revenue Rulings:
57–589
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
65–316
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
68–125
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
69–563
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
74–326
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
78–179
Obsoleted by
REG–106917–99, 2001–27 I.R.B. 4
1
A cumulative list of current actions on previously
published items in Internal Revenue Bulletins
2001–1 through 2001–26 is in Internal Revenue
Bulletin 2001–27, dated July 2, 2001.

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