Internal Revenue Bulletin 2003-30 (PDF rendition): IRS Revenue Procedures

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Bulletin No. 2003-30
July 28, 2003
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.
SPECIAL ANNOUNCEMENT
Announcement 2003–46, page 222.
This announcement informs the public that the Service is cur-
rently reviewing information regarding test procedures and re-
sults that have been presented as evidence that fuel underwent
a significant chemical change. Until the review is complete,
rulings on the question of significant chemical change will be
suspended for requests relying on the procedures and results
being reviewed.
INCOME TAX
Rev. Rul. 2003–81, page 126.
Depreciation of assets.This ruling provides guidance as to
the proper asset class under Rev. Proc. 87–56, 1987–2 C.B.
674, to depreciate assets owned by a utility that are used in the
business operations of the utility. Rev. Proc. 2002–9 modified
and amplified.
Rev. Rul. 2003–82, page 125.
Tertiary injectant expenses.This ruling clarifies whether
only the costs of acquiring tertiary injectants are eligible for
the enhanced oil recovery credit provided in section 43 of the
Code or whether the costs of using tertiary injectants also are
eligible for the credit.
Notice 2003–47, page 132.
This notice announces the ServiceÊs position regarding certain
transactions involving the transfer of nonstatutory stock op-
tions to a related person in exchange for a long-term, unse-
cured deferred payment obligation. The notice provides that
the transfer will not constitute an armÊs length transaction for
purposes of regulations section 1.83–7, and that the receipt
of the deferred payment obligation will not result in a deferral
of the recognition of income arising from the transfer.
EMPLOYEE PLANS
Rev. Rul. 2003–83, page 128.
Minimum funding; entry age normal; reasonableness.
This ruling addresses two situations where the aggregate en-
try age normal method of funding is not a reasonable funding
method within the meaning of section 412(c)(3) of the Code
and section 1.412(c)(3)–1 of the regulations.
Notice 2003–48, page 133.
Weighted average interest rate update.The weighted av-
erage interest rate for July 2003 and the resulting permissible
range of interest rates used to calculate current liability for pur-
poses of the full funding limitation of section 412(c)(7) of the
Code are set forth.
ADMINISTRATIVE
Rev. Proc. 2003–52, page 134.
Magnetic media; electronic filing; 2003 form specifica-
tions.Specifications are set forth for the magnetic or elec-
tronic filing of 2003 Forms 1098, 1099, 5498, and W–2G.
Rev. Proc. 2002–34 superseded.
Announcements of Disbarments and Suspensions begin on page 222.
Finding Lists begin on page ii.

The IRS Mission
Provide AmericaÊs taxpayers top quality service by helping
them understand and meet their tax responsibilities and by
applying the tax law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, 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. Bul-
letin 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, mod-
ify, or amend any of those previously published in the Bulletin.
All published rulings apply retroactively unless otherwise indi-
cated. Procedures relating solely to matters of internal man-
agement 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 published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions 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, Leg-
islation 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 Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the TreasuryÊs Office of the Assistant Sec-
retary (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 semiannual
period, respectively.
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.
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Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 38.—General
Business Credit
The definition of the term "qualified tertiary
injectant expenses" includes expenditures related to
the use of a tertiary injectant as well as expenditures
related to the acquisition of the tertiary injectant.
Costs that would have been paid or incurred in the
development or operation of a mineral property
if an enhanced oil recovery project had not been
implemented are not "qualified tertiary injectant
expenses." Costs that are related to the use of a
tertiary injectant and that also are related to other
activities must be reasonably allocated among the
tertiary injectant and the other activities.
See Rev.
Rul. 2003-82, page 125.
Section 43.—Enhanced Oil
Recovery Credit
26 CFR 1.43–4: Qualified enhanced oil recovery
costs.
(Also§§38,193.)
Tertiary injectant expenses.This rul-
ing clarifies whether only the costs of ac-
quiring tertiary injectants are eligible for
the enhanced oil recovery credit provided
in section 43 of the Code or whether the
costs of using tertiary injectants also are el-
igible for the credit.
Rev. Rul. 2003–82
ISSUE
For purposes of § 43(c)(1)(C) of the In-
ternal Revenue Code, what expenditures
are included in the term “qualified tertiary
injectant expenses” under § 193(b)?
FACTS
X, a domestic producer
of oil, owns
operating interests i
n numerous mineral
properties located w
ithin the United States.
Subsequent to Decem
ber 31, 1990,Xbe-
gan the injection of
liquids and gases into
oil reservoirs in c
onnection with enhanced
oil recovery (EOR)
projectsXhad imple-
mented with respe
ct to the mineral proper-
ties. All of the EO
R projects that had been
implemented b
yXqualify for the enhanced
oil recovery c
redit provided in § 43.
In some cases,
Xpurchased liquids and
gases to injec
t into the reservoirs in con-
nection with
the EOR projects. In other
cases,Xprod
uced tertiary injectants (for
example,Xburned natural gas to fuel boil-
ers that produced steam for use as an injec-
tant) rather than purchasing them.
Xpaid or incurred costs either to acquire
or produce the liquids and gases used as
tertiary injectants inX’s EOR projects. In
addition to the costs of acquiring or pro-
ducing the tertiary injectants,Xalso in-
curred costs to inject, recover, and reinject
the purchased and produced tertiary injec-
tants.
LAW AND ANALYSIS
Section 43(a) provides that, for pur-
poses of § 38, the enhanced oil recovery
credit for any taxable year is an amount
equal to 15 percent of the taxpayer’s qual-
ified enhanced oil recovery costs for the
taxable year.
Section 43(c)(1) provides that the term
“qualified enhanced oil recovery costs”
means any of the following:
(A) Any amount paid or incurred during
the taxable year for tangible property
(i) which is an integral part of a quali
-
fied enhanced oil recovery project, a
nd
(ii) with respect to which depreciati
on
(or amortization in lieu of depreciat
ion) is
allowable under chapter 1;
(B) Any intangible drilling and devel
-
opment costs
(i) which are paid or incurred in conne
c-
tion with a qualified enhanced oil re
covery
project, and
(ii) with respect to which the taxpay
er
maymakeanelectionunder§263(c)f
or
the taxable year.
(C) Any qualified tertiary inj
ectant ex-
penses (as defined in § 193(b)
) which are
paid or incurred in connectio
nwithaqual-
ified enhanced oil recovery
project and for
which a deduction is allowab
le for the tax-
able year.
Section 193(a) allows as a de
duction
for the taxable year an amou
nt equal to
the qualified tertiary inj
ectant expenses of
the taxpayer for tertiary
injectants injected
during the taxable year.
Section 193(b)(1) provid
es that the
term “qualified tertiar
y injectant ex-
penses” means any cos
tpaidorincurred
(whether or not charg
eable to capital ac-
count) for any terti
ary injectant (other than
a hydrocarbon injectant which is recover-
able) which is used as a part of a tertiary
recovery method.
Section 193(c) provides that no deduc-
tion shall be allowed under § 193(a) with
respect to any expenditure
(1) with respect to which the taxpayer
has made an election under § 263(c), or
(2) with respect to which a deduction is
allowed or allowable to the taxpayer under
any other provision of chapter 1.
Section 43 was enacted as part of the
Omnibus Revenue Reconciliation Act of
1990, Pub. L. 101–508, 104 Stat. 1388.
As it was originally enacted, § 43(c)(1)(C)
defined the term “qualified enhanced oil
recovery costs” to include any qualified
tertiary injectant expenses that are paid or
incurred in connection with a qualified en-
hanced oil recovery project and for which a
deduction is allowable under § 193 for the
taxable year.
Section 317(a)(1)–(2) of the Commu-
nity Renewal Tax Relief Act of 2000,
Pub. L. 106–554, 114 Stat. 2673A–587,
amended § 43(c)(1)(C) to provide tha
t
the term “qualified enhanced oil re
covery
costs” means any qualified tertia
ry injec-
tant expenses (as defined in § 193(
b)) that
arepaidorincurredinconnectio
n with
a qualified enhanced oil recove
ry project
and for which a deduction is allo
wable
for the taxable year. The amend
ment was
to take effect as if included i
n§43asit
was originally enacted under
the Revenue
Reconciliation Act of 1990.
Consequently, the term “qual
ified ter-
tiary injectant expense
s” for purposes of
§ 43(c)(1)(C), as amend
ed, has the same
meaning as that term ha
s for purposes of
§193(b).
The legislative histo
ry underlying § 193
indicates that tertia
ry injectant expenses
include costs relate
dtotheuseofater-
tiary injectant, for
example, “costs related
to injecting a subst
ance with a transitory
effect on productio
n” and “costs of produc-
ing and reinjectin
g gas or hydrocarbon liq-
uids utilized in a
recycling process.”See
S. Rep. No. 394, 96
th
Cong., 1
st
Sess. 97
(1979), 1980–3
C.B. 131, 215. The leg-
islative hist
ory further states that the pur-
pose of § 193 is
“to encourage the use
of expensive
tertiary enhanced oil recov-
ery processe
s.”Id. 1980–3 C.B. 131, 216.
Neither § 19
3 nor its legislative history,
20
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5
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however, indicates that the term “qualified
tertiary injectant expenses” was intended
to include costs a taxpayer would have paid
or incurred in the development or opera-
tion of a mineral property if an enhanced
oil recovery project had not been imple-
mented with respect to the property, for ex-
ample, costs paid or incurred to plug and
abandon wells.
Accordingly, for purposes of
§ 43(c)(1)(C),X’s costs paid or incurred
to either acquire or produce the liquids
and gases used as tertiary injectants in
X’s EOR projects are “qualified tertiary
injectant expenses” as defined in § 193(b).
The term “qualified tertiary injectant ex-
penses” also includesX’s costs to inject,
recover, and reinject the purchased and
produced tertiary injectants.
HOLDING
For purposes of § 43(c)(1)(C), the
definition of the term “qualified tertiary
injectant expenses” includes expenditures
related to the use of a tertiary injectant
as well as expenditures related to the ac-
quisition (whether produced or acquired
by purchase) of the tertiary injectant.
The term “qualified tertiary injectant ex-
penses”, however, does not include costs
a taxpayer would have paid or incurred in
the development or operation of a min-
eral property if an enhanced oil recovery
project had not been implemented with
respect to the property. Costs that are
related to the use of a tertiary injectant and
that also are related to other activities (for
example, primary or secondary recovery)
must be reasonably allocated among the
tertiary injectant and the other activities to
determine the amount of tertiary injectant
expenses paid or incurred by the taxpayer
for the taxable year.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Jaime C. Park of the Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, contact
Ms. Park at (202) 622–3120 (not a toll-free
call).
Section 167.—Depreciation
26 CFR 1.167(a)-11: Depreciation based on class
lives and asset depreciation ranges for property
placed in service after December 31, 1970.
How are assets owned by a utility and used in its
general business operations classified for deprecia-
tion purposes? See Rev. Rul. 2003-81, page 126.
Section 168.—Accelerated
Cost Recovery System
(Also §§ 167, 446, 481; 1.167(a)–11.)
Depreciation of assets.This ruling
provides guidance as to the proper asset
class under Rev. Proc. 87–56, 1987–2
C.B. 674, to depreciate assets owned by a
utility that are used in the business oper-
ations of the utility. Rev. Proc. 2002–9
modified and amplified.
Rev. Rul. 2003–81
ISSUE
What is the proper asset guideline class
under Rev. Proc. 87–56, 1987–2 C.B. 674,
as clarified and modified by Rev. Proc.
88–22, 1988–1 C.B. 785, for the depreci-
ation of assets owned by a utility that are
used in the general business operations of
the utility?
FACTS
U, a utility, owns a steam production
plant and engages in the production of
electricity for sale (production of electric-
ity).Upurchases a work bench for the
maintenance garage and uses the work
bench to help repair various plant ma-
chinery and equipment that are damaged
during the production of electricity.U
also purchases a bookcase and uses the
bookcase to hold training manuals and
operation protocols in the plant supervi-
sor’s office. Additionally,Uconstructs
a new parking lot outside the plant facil-
ity (parking lotA) for use byU’s plant
employees. Finally,Uconstructs a new
parking lot adjacent to its corporate head-
quarters (parking lotB), located 100 miles
from the plant, for use byU’s corporate
headquarters employees.
For regulatory accounting purposes,
Uincludes certain assets that are used in
its general business operations in various
general plant accounts under the Uniform
System of Accounts prescribed for public
utilities by the Federal Energy Regulatory
Commission (FERC). Specifically,Uin-
cludes the work bench in FERC account
394 (Tools, shop, and garage equipment),
the bookcase in FERC account 391 (Office
furniture and equipment), and both park-
ing lots in FERC account 390 (Structures
and improvements).
LAW AND ANALYSIS
Section 167(a) of the Internal Revenue
Code provides that there shall be allowed
as a depreciation deduction a reasonable
allowance for the exhaustion and wear
and tear of property used in a trade or
business or held for the production of
income. The depreciation deduction pro-
vided by § 167(a) for tangible property
placed in service after 1986 generally is
determined under § 168. This section
prescribes two methods of accounting
for determining depreciation allowances:
(1) the general depreciation system in
§ 168(a); and (2) the alternative depre-
ciation system in § 168(g). Under either
depreciation system, the depreciation de-
ductioniscomputedbyusingaprescribed
depreciation method, recovery period, and
convention.
For purposes of either § 168(a) or
§ 168(g), the applicable recovery period is
determined by reference to class life or by
statute. See, for example, § 168(e). Sec-
tion 168(i)(1) provides that the term “class
life” means the class life (if any) that
would be applicable with respect to any
property as of January 1, 1986, under for-
mer § 167(m) as if it were in effect and the
taxpayer had made an election under that
section. Prior to its revocation, § 167(m)
provided that in the case of a taxpayer
who elected the asset depreciation range
system of depreciation, the depreciation
deduction would be computed based on
the class life prescribed by the Secretary
that reasonably reflects the anticipated
useful life of that class of property to the
industry or other group.
Section 1.167(a)–11(b)(4)(iii)(b)ofthe
Income Tax Regulations provides rules
for classifying property under former
§ 167(m). Property is included in the asset
guideline class for the activity in which
the property is primarily used. Property is
Ju
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12
6
20
03-30 I.R.B.

classified according to primary use even
though the use is insubstantial in relation
to all of the taxpayer's activities.
Rev. Proc. 87–56 sets forth the class
lives of property that are necessary to
compute the depreciation allowances un-
der § 168. Rev. Proc. 87–56 establishes
two categories of depreciable assets: (1)
asset classes 00.11 through 00.4, which
consist of specific assets used in all busi-
ness activities (asset categories); and (2)
asset classes 01.1 through 80.0, which
consist of assets used in specific business
activities (activity categories) based on
broadly defined industry classifications.
The same item of depreciable property
may be described in both an asset category
and an activity category, in which case
the item is classified in the asset category
unless specifically excluded from the asset
category or specifically included in the
activity category.See Norwest Corpora-
tion & Subsidiaries v. Commissioner,111
T.C. 105 (1998) (item included in both
an asset category and an activity category
(furniture and fixtures) should be placed
in the asset category). The asset classes
described below are set forth in Rev. Proc.
87–56.
Asset class 00.11, Office Furniture,
Fixtures, and Equipment, includes furni-
ture and fixtures that are not a structural
component of a building. This asset class
includes assets such as desks, files, safes,
and communications equipment. Assets in
this class have a recovery period of 7 years
for purposes of § 168(a) and 10 years for
purposes of § 168(g).
Asset class 00.3, Land Improvements,
includes improvements directly to or
added to land, whether the improvements
are section 1245 property or section 1250
property, provided the improvements
are depreciable. Examples of the assets
might include sidewalks, roads, canals,
waterways, drainage facilities, sewers (not
including municipal sewers in Class 51),
wharves and docks, bridges, fences, land-
scaping, shrubbery, or radio and television
transmitting towers. Asset class 00.3 does
not include land improvements that are
explicitly included in any other class, and
buildings and structural components as
defined in § 1.48–1(e) of the regulations.
Assets in this class have a recovery period
of 15 years for purposes of § 168(a) and
20 years for purposes of § 168(g).
Asset class 49.13, Electric Utility
Steam Production Plant, includes assets
used in the steam power production of
electricity for sale, combustion turbines
operated in a combined cycle with a
conventional steam unit and related land
improvements. This asset class also in-
cludes package boilers, electric generators
and related assets such as electricity and
steam distribution systems as used by a
waste reduction and resource recovery
plant if the steam or electricity is normally
for sale to others. Assets in this class have
a recovery period of 20 years for purposes
of § 168(a) and 28 years for purposes of
§ 168(g).
Rev. Proc. 87–56 is an extension and
modification of Rev. Proc. 62–21, 1962–2
C.B. 418. Rev. Proc. 62–21 abandoned
the asset by asset approach of depreciation.
Instead, all assets used in a particular in-
dustry classification (business activity), re-
gardless of their nature, were grouped into
asingleclass.See also The Adoption of the
Asset Depreciation Range (ADR) System,
Announcement 71–76, 1971–2 C.B. 503,
507. Rev. Proc. 62–21 included, in addi-
tiontoassetsgroupedbybroadindustrial
classifications, certain broad general asset
classifications.
Non-tax categorizations such as FERC
account practices generally are not con-
trolling for purposes of asset classifica-
tion for federal income tax depreciation.
The number of federal income tax depre-
ciation activity categories for the utility
services industry is significantly smaller
than the number of FERC accounts. The
limited number of utility services activity
categories does not mean that the assets
listed in FERC accounts, but not specifi-
cally mentioned in the utility services ac-
tivity categories, are excluded from the
utility services activity categories. Instead,
the utility services activity categories for
federal income tax depreciation purposes
(subclasses of asset class 49) are broad
and include many activities and assets that
are separately described in greater detail in
FERC accounts.
The work bench thatUincludes in
FERC account 394 is used to help repair
various plant machinery and equipment
items that are damaged during the pro-
duction of electricity. The work bench
helps keepU’s business activity running
smoothly and efficiently and is used in
connection withU’s business activity of
producing electricity that is described in
asset class 49.13. Because the work bench
is used in connection withU’s business
activity of producing electricity, and is not
describedinanassetcategory,thework
bench is classified in asset class 49.13.
ThebookcasethatUincludes in FERC
account 391 is used to hold training man-
uals and operation protocols. The book-
caseisusedinconnectionwithU’s busi-
ness activity of producing electricity and
therefore is included in asset class 49.13,
an activity category. The bookcase is also
included in asset class 00.11, an asset cat-
egory. An asset that is included in both
an asset category and an activity category
is placed in the asset category unless it is
specifically excluded from the asset cate-
gory or specifically included in the activity
category.See Norwest. Because the book-
case is included in both asset class 00.11
and asset class 49.13, and not specifically
excluded from asset class 00.11 or specif-
ically included in asset class 49.13, the
bookcase is classified in asset class 00.11.
Uincludes both parking lots in FERC
account 390. Both parking lotAand park-
ing lotBare used in connection withU’s
business activity of producing electricity
that is described in asset class 49.13, an
activity category, and both are also de-
scribed in asset class 00.3, an asset cat-
egory. An asset that is included in both
an asset category and an activity category
is placed in the asset category unless it is
specifically excluded from the asset cate-
gory or specifically included in the activity
category. Asset class 00.3 specifically ex-
cludes land improvements that are explic-
itly included in any other class. Asset class
49.13 specifically includes land improve-
mentsthatarerelatedtoassetsusedinthe
steam power production of electricity for
sale. Thus, any land improvements used
in connection withU’s business activity
of producing electricity and related to as-
sets used in the steam power production of
electricity for sale are classified inU’s ac-
tivity category, asset class 49.13. Parking
lotA, located outside the plant facility, is
considered a “related land improvement”
under asset class 49.13 because parking lot
Ais related to the plant that produces the
electricity. Conversely, parking lotB,lo-
cated adjacent toU’s corporate headquar-
ters 100 miles from the plant, is not con-
sidered a “related land improvement” un-
der asset class 49.13 because parking lotB
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is not related to the plant that produces the
electricity. Accordingly,U’s parking lotA
is classified in asset class 49.13;U’s park-
ing lotBis classified in asset class 00.3.
HOLDINGS
Based on the facts described above,
the workbench is classified in asset class
49.13; the bookcase is classified in asset
class 00.11; parking lotA(located outside
the plant facility) is classified in asset class
49.13; and parking lotB(adjacent toU’s
corporate headquarters located 100 miles
from the plant) is classified in asset class
00.3.
CHANGE IN METHOD OF
ACCOUNTING
A change in a taxpayer’s treatment
of depreciable property to conform with
this revenue ruling is a change in method
of accounting to which the provisions of
§§ 446(e) and 481 and the regulations
thereunder apply.
A taxpayer wanting to change the
method of accounting for depreciable
property that is owned by the taxpayer
at the beginning of the year of change
and for which the taxpayer has used an
impermissible method of accounting for
two or more consecutive taxable years
immediately preceding the year of change,
to conform with this revenue ruling must
follow the automatic change in method
of accounting provisions in Rev. Proc.
2002–9, 2002–3 C.B. 327 (as modified
and amplified by Rev. Proc. 2002–19,
2002–13 C.B. 696, as amplified, clarified,
andmodifiedbyRev. Proc. 2002–54,
2002–35 I.R.B. 432, and as modified
and clarified by Announcement 2002–17,
2002–8 C.B. 561) or any successor, with
the following modifications:
(1) The scope limitations in section 4.02
of Rev. Proc. 2002–9 do not apply to a
taxpayer that wants to change its method
of accounting for the cost of depreciable
property to conform with this revenue rul-
ing for either its first or second taxable
year ending after December 31, 2001, pro-
vided the taxpayer’s method of account-
ing for the cost of depreciable property is
not an issue under consideration (within
the meaning of section 3.09 of Rev. Proc.
2002–9) for taxable years under examina-
tion, before an appeals office, or before a
federal court at the time the Form 3115 is
filed with the national office; and
(2) To assist the Internal Revenue Ser-
vice in processing changes in method
of accounting under this revenue ruling,
and to ensure proper handling, section
6.02(4)(a) of Rev. Proc. 2002–9 is mod-
ified to require that a Form 3115 filed
under this revenue procedure include the
statement: “Automatic Change Filed Un-
der Rev. Rul. 2003–81.” This statement
shouldbelegiblyprintedortypedonthe
appropriate line on the Form 3115.
AUDIT PROTECTION
A utility taxpayer, which owns a steam
production plant and engages in the pro-
duction of electricity for sale, may con-
tinue to use its present method of treating
the cost of depreciable property described
in an asset category (asset classes 00.11
through 00.4) or a specific utility services
activity class (asset classes 49.11 through
49.4) that was placed in service during any
taxable year ending on or before June 27,
2003, if use of such method results in a
longer recovery period than would be re-
quired by this revenue ruling.
EFFECT ON OTHER DOCUMENTS
Rev. Proc. 2002–9 is modified and am-
plified to include this change in method of
accounting under section 2 of the APPEN-
DIX.
DRAFTING INFORMATION
The principal author of this revenue rul-
ing is Alan Cooper of the Office of As-
sociate Chief Counsel (Passthroughs and
Special Industries). For further informa-
tion regarding this revenue ruling, contact
John Huffman at (202) 622–3110 (not a
toll-free call).
Section 193.—Tertiary
Injectants
26 CFR 1.193-1(b)(1): Qualified tertiary injectant
expenses.
The definition of the term "qualified tertiary
injectant expenses" includes expenditures related to
the use of a tertiary injectant as well as expenditures
related to the acquisition of the tertiary injectant.
Costs that would have been paid or incurred in the
development or operation of a mineral property
if an enhanced oil recovery project had not been
implemented are not "qualified tertiary injectant
expenses." Costs that are related to the use of a
tertiary injectant and that also are related to other
activities must be reasonably allocated among the
tertiary injectant and the other activities. See Rev.
Rul. 2003-82, page 125.
Section 412.—Minimum
Funding Standards
26 CFR 1.412(c)(3)–1: Reasonable funding methods.
Minimum funding; entry age nor-
mal; reasonableness.This ruling ad-
dresses two situations where the aggregate
entry age normal method of funding is
not a reasonable funding method within
the meaning of section 412(c)(3) of the
Code and section 1.412(c)(3)–1 of the
regulations.
Rev. Rul. 2003–83
ISSUE
Does the aggregate entry age normal
funding method constitute a reasonable
fundingmethodwithinthemeaningof
§ 412(c)(3) of the Internal Revenue Code
and § 1.412(c)(3)–1 of the Income Tax
Regulations?
FACTS
Situation 1. Plan M uses the follow-
ing version of the aggregate entry age nor-
mal funding method. The normal cost un-
der Plan M equals the product of the nor-
mal cost per participant and the number
of active participants under the latest as-
sumed retirement age. The normal cost
per participant is equal to A divided by B,
where A is the sum, for all active partici-
pants under the latest assumed retirement
age, of the present value (as of each partic-
ipant's entry age) of the participant's pro-
jected benefits and B is the sum, for all ac-
tive participants under the latest assumed
retirement age, of the present value (as of
each participant's entry age) of a level an-
nuity of 1 per year payable from the par-
ticipant's entry age until the participant's
retirement age. The accrued liability for
the plan as of any valuation date is equal
to the excess of C over D, where C is the
sum, for all participants, of the present
value (as of the participant's attained age)
of the participant's projected benefits and
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03-30 I.R.B.

D is the present value of future normal
costs. Thepresentvalueoffuturenormal
costs is equal to the product of the normal
cost per participant and the present value
of future lives. The present value of future
lives is the sum, for all active participants
under the latest assumed retirement age, of
the present values (determined as of each
participant's attained age) of an annuity of
1 per year payable from the participant's at-
tained age until the participant's retirement
age. The valuation date for Plan M for each
plan year is January 1, the first day of the
plan year, and the actuarial value of the as-
sets is determined as the fair market value
of the assets.
Situation 2. Plan N uses the following
version of the aggregate entry age normal
funding method. The normal cost under
Plan N equals the product of the normal
cost accrual rate and the total current com-
pensation of all active participants under
the latest assumed retirement age. The
normal cost accrual rate is equal to A
divided by B, where A is the sum, for
all active participants under the latest as-
sumed retirement age, of the present value
(as of each participant's entry age) of the
participant's projected benefits and B is
the sum, for all active participants under
the latest assumed retirement age, of the
present value (as of each participant's entry
age) of each participant's compensation
beginning with the assumed compensation
as of the participant's entry age (deter-
mined by retroactively applying the pay
increase factor to the participant's current
compensation) until the participant's re-
tirement age. The accrued liability for
the plan as of any valuation date is equal
to the excess of C over D, where C is the
sum, for all participants, of the present
value (as of each participant's attained
age) of the participant's projected benefits
and D is the present value of future normal
costs. Thepresentvalueoffuturenormal
costs is equal to the product of the normal
cost accrual rate and the present value
of future compensation. The present
value of future compensation is defined as
the sum, for all active participants under
the latest assumed retirement age, of the
present value (determined as of each par-
ticipant's attained age) of the participant's
future compensation from the participant's
attained age until the participant's retire-
ment age. The valuation date for Plan N
for each plan year is January 1, the first
day of the plan year, and the actuarial
value of the assets is determined as the fair
market value of the assets.
APPLICABLE LAW
Section 412(c)(3) of the Internal Rev-
enue Code requires that all costs and
liabilities of a pension plan be determined
on the basis of assumptions and methods
that are reasonable. Section 1.412(c)(3)–1
of the Income Tax Regulations prescribes
rules for determining whether or not, in
the case of an ongoing plan, a funding
method is reasonable for purposes of
§ 412(c)(3). Section 1.412(c)(3)–1(c)(2)
provides that a funding method is rea-
sonable only if it produces no experience
gains and losses when each actuarial as-
sumption is exactly realized.
Rev. Rul. 81–213, 1981–2 C.B. 101,
provides guidelines for the determination
of experience gains and losses, including
separate rules for immediate gain type
funding methods and spread gain type
funding methods. Under section 2.02 of
Rev. Rul. 81–213, an immediate-gain
type funding method is a funding method
that directly calculates an accrued liability.
Rev. Rul. 81–13, 1981–1 C.B. 229,
provides that an accrued liability can be di-
rectly calculated under the funding method
used for the plan if the following three
conditions are met: (1) the accrued lia-
bility may be determined solely from the
computations with respect to the liabilities
(without reference to plan assets); (2) the
accrued liability is an integral part of the
funding method used; and (3) the accrued
liability satisfies the definition of section
3(29) of the Employee Retirement Income
Security Act of 1974 (ERISA). In order for
the accrued liability to be an integral part of
the funding method used for the plan, such
accrued liability or both the present value
of future benefits and the present value of
future normal costs must be calculated as
part of the funding method and must be
used to determine plan costs. In order
to satisfy the definition of section 3(29)
of ERISA, the accrued liability must be
equal to the present value of future ben-
efits less the present value of future nor-
mal costs. The normal costs that are so
used are the plan's anticipated future nor-
mal costs under the funding method as of
the valuation date.
Section 5.01 of Rev. Rul. 81–213
provides that the “actual unfunded li-
ability” as of any valuation date is the
excess, if any, of the accrued liability over
the actuarial value of assets as of that
date. Section 6.01 of Rev. Rul. 81–213
provides that, in general, for an immediate
gain type funding method, there is an
experience gain if the expected unfunded
liability as of a valuation date exceeds
the actual unfunded liability as of that
date. Conversely, there is an experience
loss if the actual unfunded liability at a
valuation date exceeds the expected un-
funded liability as of that date. Section
6.02 of Rev. Rul. 81–213 generally de-
fines the “expected unfunded liability” for
an immediate-gain type funding method as
(1) the actual unfunded liability as of the
prior valuation date, plus (2) the normal
cost, minus (3) contributions, all adjusted
with interest to the valuation date.
ANALYSIS
In Situation 1, the accrued liability un-
der Plan M's version of the aggregate entry
age normal funding method is determined
solely from the computations with respect
to the liabilities under Plan M, without ref-
erence to plan assets. In addition, the ac-
crued liability is an integral part of Plan
M's funding method (i.e., the accrued li-
ability is calculated as part of the fund-
ing method and is used to determine plan
costs). Furthermore, the accrued liability
under Plan M's funding method satisfies
the definition of section 3(29) of ERISA
(i.e., the accrued liability is equal to the
present value of future benefits less the
present value of the plan's anticipated fu-
ture normal costs determined under the
funding method). Therefore, Plan M's
version of the aggregate entry age normal
funding method directly calculates an ac-
crued liability. Accordingly, Plan M's
version of the aggregate entry age nor-
mal funding method is an immediate gain
method for purposes of applying the rules
of Rev. Rul. 81–213 for computing expe-
rience gains and losses.
In Plan M's version of the aggregate en-
try age normal funding method, both the
numerator and the denominator of the frac-
tion used to determine the normal cost per
participant are equal to the sum of several
present values, with each present value be-
ing determined as of a given participant's
20
03-30 I.R.B.
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Ju
ly 28, 2003

entry age. For participants with different
entry ages, these present values are calcu-
lated as of different points in time and this
inconsistency will cause the normal cost
under Plan M to follow a pattern over time
that is different than the pattern of the ex-
pected number of active plan participants
(i.e., the normal cost per participant will
not remain level over subsequent valuation
dates). In turn, this failure of the nor-
mal cost per participant to remain level will
cause the method to produce experience
gains or losses even if all actuarial assump-
tions are exactly realized. This phenome-
non is illustrated by the following simpli-
fied example. The actuarial assumptions
used in this example were chosen to sim-
plify the illustration and are not necessar-
ily reasonable actuarial assumptions for an
actual plan.
As of January 1, 2003, (the valuation
date for the plan year beginning January 1,
2003), a plan using the method described
in situation 1 has 20 active participants,
10 of whom are age 35, and 10 of whom
are age 55. There are no inactive par-
ticipants. The participants who are age
35 all entered the plan at age 35 and have
projected annual retirement benefits of
$12,000. The participants who are age
55 all entered the plan at age 30 and have
projected annual retirement benefits of
$10,000. The expected retirement age for
all participants is 65. Under the actuarial
assumptions used by the plan, the present
value as of age 65 of an annual retirement
benefit of 1 is 10.000. The pre-retirement
interest rate is 7%. There are no pre-re-
tirement decrements other than at age 35
(for which the probability of remaining
an active participant until age 36 is 50%),
and there are no benefits payable under
the plan on account of a decrement at
age 35. For funding purposes, the plan
sets the value of assets equal to their fair
market value. As of January 1, 2003, the
value of the plan's assets is $450,000.
The actuarial valuation results for the
2003 plan year are as follows:
The sum, for all active participants, of
the present value (as of each participant's
entry age) of the participant's projected
benefits is $125,651.72. The sum, for all
active participants, of the present value (as
of each participant's entry age) of a level
annuity of 1 per year payable from the par-
ticipant's entry age until the participant's
retirement age is 166.1594. Accordingly,
the normal cost per participant is $756.21
($125,651.72 divided by 166.1594), and
the normal cost for the plan is $756.21
×20(thenumberofparticipants),or
$15,124.24.
The present value of projected bene-
fits (as of January 1, 2003) is $587,169.50
and the present value of future lives is
146.5407. Therefore, the present value
of future normal costs (as of January 1,
2003) is $110,815.82 (equal to $756.21 ×
146.5407) and the accrued liability as of
the valuation date is $476,353.69.
The actual unfunded liability for the
current year is $26,353.69 (equal to the ex-
cess of the accrued liability over the as-
set value of $450,000). Assuming the
employer makes a single contribution of
$20,000 at the end of the year, the expected
unfunded liability at the next valuation is
$24,381.39 (equal to $26,353.69 × 1.07 +
$15,124.24 × 1.07 - $20,000).
During 2003, all actuarial assumptions
are exactly realized and there are no new
hires. Thus, all 10 of the participants
aged 55 remain active participants at age
56, 5 of the participants aged 35 remain
active participants at age 36 and the value
of assets on January 1, 2004, is equal to
$501,500 ($450,000 × 1.07 + $20,000).
As of January 1, 2004, the actuarial val-
uation results are as follows:
The sum, for all active participants, of
the present value (as of each participant's
entry age) of the participant's projected
benefits is $86,241.59. The sum, for all
active participants, of the present value (as
of each participant's entry age) of a level
annuity of 1 per year payable from the par-
ticipant's entry age until the participant's
retirement age is 130.4652. Accordingly,
the normal cost per participant is $661.03
($86,241.59 divided by 130.4652), and the
normal cost for the plan is $661.03 × 15
(the number of participants), or $9,915.47.
The present value of projected bene-
fits (as of January 1, 2004) is $628,271.38
and the present value of future lives is
135.3986. Accordingly, the present value
of future normal costs (as of January 1,
2004) is $89,502.70 (which is equal to
$661.03 × 135.3986) and the accrued lia-
bility is $538,768.69.
The actual unfunded liability as of Jan-
uary 1, 2004, is $37,268.69 (equal to the
excess of the accrued liability over the as-
set value of $501,500).
As noted above, the expected unfunded
liability as of January 1, 2004, is equal to
$24,381.38, but the actual unfunded liabil-
ity as of that date is $37,268.69. Thus,
despite the fact the actuarial assumptions
were exactly realized during 2003, the plan
has experienced an actuarial loss for 2003
of $12,887.31 (equal to the difference be-
tween the actual unfunded liability and the
expected unfunded liability).
In Situation 2, the funding method used
by Plan N is similar to that used by Plan
M in Situation 1, in that both the numer-
ator and the denominator of the fraction
used to determine the normal cost accrual
rate (which is analogous to the normal cost
per participant in Situation 1) are equal
to the sum of several present values, with
each present value calculated as of the re-
spective participants' entry ages. For par-
ticipants with different entry ages, these
present values are calculated as of differ-
ent points in time and this inconsistency
will cause the normal cost under Plan M
to follow a different pattern over time than
the expected aggregate compensation of
active plan participants (i.e.,thenormal
cost accrual rate will not remain level over
time). In turn, this failure of the normal
cost to remain level as a percent of com-
pensation will cause the method to produce
experience gains or losses even if all actu-
arial assumptions are exactly realized.
HOLDING
Because it can create experience gains
or losses even if all actuarial assumptions
are exactly realized, the aggregate entry
age normal funding method that deter-
mines the normal cost per plan participant
by dividing the sum of the present val-
ues (determined as of each participant's
entry age) of each participant's projected
benefits by the sum of the present values
(determined as of each participant's entry
age) of an annuity for each participant
equal to 1 per year payable from the
participant's entry age until the partici-
pant's retirement age does not constitute
a reasonable funding method within the
meaning of § 1.412(c)(3)–1 of the regula-
tions.
Because it can create experience gains
or losses even if all actuarial assumptions
are exactly realized, the aggregate entry
age normal funding method that deter-
mines the normal cost accrual rate by
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ly 28, 2003
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03-30 I.R.B.

dividing the sum of the present values (de-
termined as of each participant's entry age)
of each participant's projected benefits by
the sum of the present values (determined
as of each participant's entry age) of fu-
ture compensation from the participant's
entry age until the participant's retire-
ment age does not constitute a reasonable
funding method within the meaning of
§ 1.412(c)(3)–1 of the regulations.
EFFECTIVE DATE AND TRANSITION
RULE
This ruling will be effective for valua-
tions performed for plan years beginning
after December 31, 2003. For plans that
are currently using a funding method as
described in this revenue ruling, the fund-
ing method may be changed to a reason-
able funding method by following the pro-
cedures set forth in Rev. Proc. 2000–40,
2000–2 C.B. 357 or Rev. Proc. 2000–41,
2000–2 C.B. 371.
DRAFTING INFORMATION
The principal author of this revenue
ruling is James E. Holland, Jr. of the
Employee Plans, Tax Exempt and Gov-
ernment Entities Division. For further
information regarding this revenue rul-
ing, contact the Employee Plans taxpayer
assistance telephone service between the
hours of 8:00 a.m. and 6:30 p.m. Eastern
Time, Monday through Friday, by call-
ing (877) 829–5500 (a toll-free number).
Mr. Holland may be reached at (202)
283–9699 (not a toll-free number).
Section 446.—General Rule
for Methods of Accounting
If a utility changes the asset or activity classifi-
cation under Rev. Proc. 87-56 of assets used by
the utility in its general business operations, is this
change a change in method of accounting under sec-
tion 446(e) of the Internal Revenue Code? See Rev.
Rul. 2003-81, page 126.
Section 481.—Adjustments
Required by Changes in
Method of Accounting
If a utility changes the asset or activity classifica-
tion under Rev. Proc. 87-56 of assets used by the
utility in its general business operations, is an adjust-
ment under section 481 of the Internal Revenue Code
taken into account in computing taxable income? See
Rev. Rul. 2003-81, page 126.
20
03-30 I.R.B.
13
1
Ju
ly 28, 2003

Part III. Administrative, Procedural, and Miscellaneous
Transfers of Compensatory Stock
Options to Related Persons
Notice 2003–47
This notice addresses a transaction be-
ing promoted to and used by taxpayers to
avoid or evade federal income and em-
ployment taxes related to compensatory
stock options. This notice alerts taxpayers
and their representatives that the tax bene-
fits purportedly generated by these transac-
tions are not allowable for federal income
tax purposes. This notice also identifies
some of these transactions as listed trans-
actions and alerts taxpayers and their rep-
resentatives to certain responsibilities that
may arise from participating in these trans-
actions.
Concurrent with this notice, Treasury
and the IRS are issuing temporary and pro-
posed regulations providing prospectively
that, for purposes of § 83 of the Inter-
nal Revenue Code and § 1.83–7, a sale or
other disposition of a nonstatutory com-
pensatory stock option
1
to a related per-
son will not be treated as a transaction that
closes the application of § 83 with respect
to the option.
I. The Transaction
The transaction involves an individual,
generally an employee, who has been
granted a nonstatutory compensatory
stock option. The individual transfers the
option to a related person. The related
person may be a family member or an en-
tity in which the individual or members of
the individual’s family hold a substantial
interest. But, for purposes of this notice,
a related person does not include (1) a
person who is related to the individual by
being the service recipient with respect to
the option or (2) the grantor of the option.
As part of the transfer, the related person
pays an amount purportedly equal to the
option’s value. The payment often is in the
form of a long-term (e.g., 30-year), unse-
cured and non-negotiable note, calling for
a balloon payment of the purchase price at
the end of the note’s term. Other payment
forms may include other deferred payment
obligations, cash or combinations of these
types of payments. The related person
often is a thinly capitalized entity, with
no operating business, and the terms of
thenote(e.g., the rate of interest and the
extent of any security) often fail to reflect
the associated risk of nonpayment.
Promoters contend that the options
should be treated as sold or otherwise
disposed of in an arm’s length transaction
for purposes of § 1.83–7, with the result
that the individual will not recognize com-
pensation income when the related person
exercises the stock option. Furthermore, if
the related person pays for the option with
a note or other deferred payment obliga-
tion, promoters argue that the individual
does not recognize compensation income
for the purchase price until the related
person pays the amounts due under the
note or other deferred payment obligation.
II. Intent to Challenge Transaction
The IRS intends to challenge the pur-
ported tax benefits for the above-described
transaction on a number of grounds, in-
cluding, in appropriate cases:
A. Characterization of Transfer as an
Arm’s Length Transaction
Although the recipient of a compen-
satory stock option receives a valuable
right, the recipient historically has not rec-
ognized income at the time of the option
grant unless the option had a readily ascer-
tainable fair market value.See Comm. v.
LoBue, 351 U.S. 243 (1956); § 1.421–6.
2
This treatment of compensatory stock
options generally was continued with the
enactment of § 83 and the promulga-
tion of § 1.83–7, which currently govern
the taxation of the grant of a nonstatu-
tory compensatory stock option. Section
83(e)(3) provides that § 83 does not apply
to require the recognition of income when
an option is granted unless the option
has a readily ascertainable fair market
value. Section 1.83–7(b) defines when
an option will be considered to have a
readily ascertainable fair market value
at grant. This standard is met where the
optionisactivelytradedonanestablished
market. Section 1.83–7(b)(1). Otherwise,
an option has a readily ascertainable fair
market value only if it can be shown that
its fair market value can be measured with
reasonable accuracy, including a demon-
stration that the fair market value of the
option privilege is readily ascertainable.
Section 1.83–7(b)(2). Options that are not
taxed at grant generally result in compen-
sation income at the time of exercise, in
an amount equal to the excess of the fair
market value of the stock purchased over
the amount paid by the option recipient.
Section 1.83–7(a) provides an excep-
tion to this treatment if the recipient of an
option that does not have a readily ascer-
tainable fair market value at the time of
grant sells or otherwise disposes of the op-
tion in an arm’s length transaction. The
transactions described in Section I of this
notice rarely, if ever, reflect terms that
would be agreed to between unrelated par-
ties dealing at arm’s length. Accordingly,
the Service will challenge the transactions
described in Section I as not satisfying
the exception under § 1.83–7(a) for arm’s
length transactions.
B. Treatment of the Deferred Payment
Obligation
In any case in which the transaction in-
cludes a disposition of an option without
a readily ascertainable fair market value
at the time of grant and the individual re-
ceives a deferred payment obligation, the
IRS intends to challenge any deferral of
income with respect to the deferred pay-
ment obligation. The preceding sentence
applies regardless of whether the transac-
tion is treated as an arm’s length transac-
tion or a non-arm’s length transaction for
purposes of § 1.83–7.
3
Thus, in any such
case, the IRS will argue that the option re-
cipient recognizes income to the extent that
1
A nonstatutory compensatory stock option refers to a stock option granted in connection with the performance of services that does not qualify as an incentive stock option described in § 422
or an option granted under an employee stock purchase plan described in § 423.
2
Except as provided in the transition rules under § 1.83–8(b), § 1.421–6 does not apply to options granted on or after July 1, 1969.See§ 1.421–6(a)(2).
3
Compare § 1.83–1(a) (transferor of substantially nonvested property in a non-arm’s length transaction must include in income the sum of any money andthe fair market value of any
substantially vested property received in such disposition).
Ju
ly 28, 2003
13
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the amount of the deferred payment obli-
gation transferred to the option recipient,
plus any cash or other property received by
the individual, exceeds the amount, if any,
the option recipient paid for the option.
Employers and other service recipients
are reminded that, under § 83(h), a service
recipient is entitled to a deduction for the
compensation attributable to the transfer of
the option only when the person who per-
formed the services includes an amount in
income under § 83(a). Accordingly, the
Service will seek to ensure that there is
no mismatch of income and deduction be-
tween the person who performed the ser-
vices and the service recipient.
III. Other Bases for Challenge
When appropriate, the Service will not
respect the transaction or certain aspects of
the transaction, and nothing in this notice
is intended to imply otherwise. Accord-
ingly, where the related entity to whom the
option is sold or disposed of is notbona
fide, lacks substance, or lacks a business
purpose, the use of the entity will be treated
accordingly. Where the transfer of the op-
tion is notbona fide, lacks substance, or
lacks a business purpose, the transfer will
also be treated accordingly. Finally, where
the deferred payment obligation lacks sub-
stance, the obligation will be treated ac-
cordingly.
IV. Listed Transactions
The following transactions, and any
transaction that is substantially similar
to the following transactions, are identi-
fied as “listed transactions” for purposes
of § 1.6011–4(b)(2) of the Income Tax
Regulations and § 301.6111–2(b)(2) and
§ 301.6112–1(b)(2) of the Procedure and
Administration Regulations. Transactions
in which an individual purports to sell or
otherwise dispose of an option described
in § 83(e)(3) to a related person are listed
transactions with respect to the individual
and the related person if the purported
sale or other disposition is in exchange
for an amount that includes any deferred
payment of money or property.
It should be noted that, independent
of any classification as “listed transac-
tions” for purposes of §§ 1.6011–4(b)(2),
301.6111–2(b)(2), and 301.6112–1(b)(2)
of the regulations, transactions that are
the same as, or substantially similar to,
the transactions described in this notice
may already be subject to the disclosure
requirements of § 6011, the tax shelter
registration requirements of § 6111 or the
list maintenance requirements of § 6112
(§§ 1.6011–4, 301.6111–1T, 301.6111–2,
and 301.6112–1).
Persons who are required to satisfy the
registration requirement of § 6111 with re-
spect to the transactions described in this
notice and who fail to do so may be subject
to the penalty under § 6707(a). Persons
who are required to satisfy the list-keeping
requirement of § 6112 with respect to the
transactions and who fail to do so may be
subject to the penalty under § 6708(a). In
addition, the Service may impose penalties
on participants in this transaction or sub-
stantially similar transactions, or, as appli-
cable, on persons who participate in the re-
porting of this transaction or substantially
similar transactions, including the accu-
racy-related penalty under § 6662 and the
return preparer penalty under § 6694.
V. Temporary and Proposed Regulations
Treasury and the IRS are issuing tempo-
rary regulations and proposed regulations
concurrent with this notice providing that
a stock option sale or other disposition to a
related person will not be treated as a trans-
action that closes the application of § 83
with respect to the option for purposes of
§ 1.83–7.
VI. Drafting Information
The principal author of this notice is
Stephen Tackney of the Office of Division
Counsel/Associate Chief Counsel (Tax
Exempt and Government Entities), though
other officials from the Office of Chief
Counsel and Treasury participated in its
development. For further information
regarding this notice, contact Stephen
Tackney at (202) 622–6030 (not a toll-free
call).
Weighted Average Interest Rate
Update
Notice 2003–48
Sections 412(b)(5)(B) and 412(l)(7)(C)
(i) of the Internal Revenue Code provide
that the interest rates used to calculate
current liability for purposes of deter-
mining the full funding limitation under
§ 412(c)(7) and the required contribution
under § 412(l) must be within a permissi-
ble range around the weighted average of
the rates of interest on 30-year Treasury
securities during the four-year period end-
ing on the last day before the beginning of
the plan year.
Notice 88–73, 1988–2 C.B. 383, pro-
vides guidelines for determining the
weighted average interest rate and the re-
sulting permissible range of interest rates
used to calculate current liability for the
purpose of the full funding limitation of
§ 412(c)(7) of the Code.
Section 417(e)(3)(A)(ii)(II) defines
the applicable interest rate, which must
be used for purposes of determining the
minimum present value of a participant’s
benefit under § 417(e)(1) and (2), as the
annual rate of interest on 30-year Treasury
securities for the month before the date
of distribution or such other time as the
Secretary may by regulations prescribe.
Section 1.417(e)–1(d)(3) of the Income
Tax Regulations provides that the applica-
ble interest rate for a month is the annual
interest rate on 30-year Treasury securi-
ties as specified by the Commissioner for
that month in revenue rulings, notices or
other guidance published in the Internal
Revenue Bulletin.
The rate of interest on 30-year Treasury
Securities for June 2003 is 4.37 percent.
Pursuant to Notice 2002–26, 2002–1 C.B.
743, the Service has determined this rate
as the monthly average of the daily deter-
mination of yield on the 30-year Treasury
bond maturing in February 2031.
Section 405 of the Job Creation and
Worker Assistance Act of 2002 amended
§ 412(l)(7)(C) of the Code to provide that
for plan years beginning in 2002 and 2003
the permissible range is extended to 120
percent.
The following rates were determined
for the plan years beginning in the month
shown below.
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MonthYear
Weighted
Average
90% to 110%
Permissible
Range
90% to 120%
Permissible
Range
July20035.344.81 to 5.874.81 to 6.41
DRAFTING INFORMATION
The principal authors of this notice
are Paul Stern and Tony Montanaro of
the Employee Plans, Tax Exempt and
Government Entities Division. For fur-
ther information regarding this notice,
please contact the Employee Plans’ tax-
payer assistance telephone service at
1–877–829–5500 (a toll-free number),
between the hours of 8:00 a.m. and
6:30 p.m. Eastern time, Monday through
Friday. Mr. Stern may be reached at
1–202–283–9703. Mr. Montanaro may
be reached at 1–202–283–9714. The
telephone numbers in the preceding two
sentences are not toll-free.
NOTE: This revenue procedure will be reprinted as the next revision of IRS Publication 1220,Specifications for Filing Forms
1098, 5498, and W–2G Electronically or Magnetically:
Use this Revenue Procedure to prepare Tax Year2003and prior year information returns for submission to Internal Revenue Service
(IRS) using any of the following.
- Electronic Filing
- Tape Cartridge
-3
1
/2-Inch Diskette
Caution to filers:
Please read this publication carefully. Persons or businesses required to file information returns electronically or
magnetically may be subject to penalties for failure to file or include correct information if they do not follow the
instructions in this Revenue Procedure.
IMPORTANT NOTES:
IRS/MCC no longer accepts 8mm, 4mm, and Quarter-Inch Cartridges (QIC) for filing
information returns. See Part A, Sec. 2.02.
The FIRE System will be down from Dec. 24, 2003, through Jan. 5, 2004, for upgrading.
It is not operational during this time for submissions.
Rev. Proc. 2003–52
TABLE OF CONTENTS
PART A. GENERAL
SEC. 1. PURPOSE................................................................................................. 136
SEC. 2. NATURE OF CHANGES—CURRENT YEAR (TAX YEAR2003).................................................. 137
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, MARTINSBURG COMPUTING CENTER.................... 139
SEC. 4. FILING REQUIREMENTS.................................................................................. 140
SEC. 5. VENDOR LIST............................................................................................. 141
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SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS
ELECTRONICALLY/MAGNETICALLY................................................................ 141
SEC. 7. TEST FILES............................................................................................... 142
SEC. 8. FILING OF INFORMATION RETURNS MAGNETICALLY AND RETENTION REQUIREMENTS.................... 143
SEC. 9. DUE DATES............................................................................................... 144
SEC. 10. REPLACEMENT MAGNETIC MEDIA....................................................................... 144
SEC. 11. CORRECTED RETURNS................................................................................... 145
SEC. 12. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS.......................................... 149
SEC. 13. COMBINED FEDERAL/STATE FILING PROGRAM........................................................... 149
SEC. 14. PENALTIES ASSOCIATED WITH INFORMATION RETURNS.................................................. 151
SEC. 15. STATE ABBREVIATIONS.................................................................................. 151
SEC. 16. MAJOR PROBLEMS ENCOUNTERED...................................................................... 152
PART B. ELECTRONIC FILING SPECIFICATIONS
SEC. 1. GENERAL................................................................................................ 154
SEC. 2. ADVANTAGES OF FILING ELECTRONICALLY.............................................................. 154
SEC. 3. ELECTRONIC FILING APPROVAL PROCEDURE............................................................. 154
SEC. 4. TEST FILES............................................................................................... 154
SEC. 5. ELECTRONIC SUBMISSIONS.............................................................................. 155
SEC. 6. PIN REQUIREMENTS...................................................................................... 156
SEC. 7. ELECTRONIC FILING SPECIFICATIONS.................................................................... 156
SEC. 8. DIAL-UP NETWORK/BROWSER SPECIFICATIONS (WEB INTERFACE)........................................ 156
SEC. 9. COMMUNICATIONS SOFTWARE SPECIFICATIONS (TEXT INTERFACE)...................................... 159
SEC. 10. MODEM CONFIGURATION............................................................................... 161
SEC. 11. COMMON PROBLEMS AND QUESTIONS ASSOCIATED WITH ELECTRONIC FILING.......................... 161
PART C. MAGNETIC MEDIA SPECIFICATIONS
SEC. 1. TAPE CARTRIDGE SPECIFICATIONS....................................................................... 163
SEC. 2. 3
1
/2-INCH DISKETTE SPECIFICATIONS..................................................................... 164
PART D. RECORD FORMAT SPECIFICATIONS AND RECORD LAYOUTS
SEC. 1. GENERAL................................................................................................. 164
SEC. 2. TRANSMITTER “T” RECORD — GENERAL FIELD DESCRIPTIONS............................................ 164
SEC. 3. TRANSMITTER “T” RECORD — RECORD LAYOUT.......................................................... 167
SEC. 4. PAYER “A” RECORD — GENERAL FIELD DESCRIPTIONS.................................................... 168
SEC. 5. PAYER “A” RECORD — RECORD LAYOUT.................................................................. 177
SEC. 6. PAYEE “B” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUTS............................ 178
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(1)Payee“B”Record—RecordLayoutPositions544–750forForm1098......................................... 185
(2)Payee“B”Record—RecordLayoutPositions544–750forForm1098–E ...................................... 186
(3)Payee“B”Record—RecordLayoutPositions544–750forForm1098–T ...................................... 186
(4)Payee“B”Record—RecordLayoutPositions544–750forForm1099–A...................................... 187
(5)Payee“B”Record—RecordLayoutPositions544–750forForm1099–B...................................... 188
(6)Payee“B”Record—RecordLayoutPositions544–750forForm1099–C...................................... 190
(7)Payee“B”Record—RecordLayoutPositions544–750forForm1099–CAP ................................... 191
(8)Payee“B”Record—RecordLayoutPositions544–750forForm1099–DIV.................................... 192
(9)Payee“B”Record—RecordLayoutPositions544–750forForm1099–G...................................... 193
(10)Payee“B”Record—RecordLayoutPositions544–750forForm1099–H..................................... 195
(11)Payee“B”Record—RecordLayoutPositions544–750forForm1099–INT................................... 195
(12)Payee“B”Record—RecordLayoutPositions544–750forForm1099–LTC................................... 196
(13)Payee“B”Record—RecordLayoutPositions544–750forForm1099–MISC................................. 198
(14)Payee“B”Record—RecordLayoutPositions544–750forForm1099–MSA.................................. 199
(15)Payee“B”Record—RecordLayoutPositions544–750forForm1099–OID................................... 201
(16)Payee“B”Record—RecordLayoutPositions544–750forForm1099–PATR ................................. 202
(17)Payee“B”Record—RecordLayoutPositions544–750forForm1099–Q..................................... 203
(18)Payee“B”Record—RecordLayoutPositions544–750forForm1099–R..................................... 204
(19)Payee“B”Record—RecordLayoutPositions544–750forForm1099–S ..................................... 208
(20)Payee“B”Record—RecordLayoutPositions544–750forForm5498........................................ 209
(21)Payee“B”Record—RecordLayoutPositions544–750forForm5498–ESA .................................. 210
(22)Payee“B”Record—RecordLayoutPositions544–750forForm5498–MSA.................................. 210
(23)Payee“B”Record—RecordLayoutPositions544–750forFormW–2G...................................... 211
SEC. 7. END OF PAYER “C” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUT..................... 212
SEC. 8. STATE TOTALS “K” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD LAYOUT..................... 214
SEC. 9. END OF TRANSMISSION “F” RECORD — GENERAL FIELD DESCRIPTIONS AND RECORD
LAYOUT........................................................................................... 216
SEC.10.FILELAYOUTDIAGRAM.................................................................................. 217
PART E. EXTENSIONS OF TIME AND WAIVERS
SEC. 1. GENERAL — EXTENSIONS................................................................................. 217
SEC. 2. SPECIFICATIONS FOR ELECTRONIC FILING OR MAGNETIC MEDIA EXTENSIONS OF TIME.................. 218
SEC. 3. RECORD LAYOUT — EXTENSION OF TIME................................................................. 219
SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS................................. 220
SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS ON MAGNETIC
MEDIA
............................................................................................ 221
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 Forms 1098, 1099, 5498, and W–2G with IRS
electronically through the IRS FIRE System or magnetically, using IBM 3480, 3490, 3490E, 3590, 3590E, or AS400 compatible tape
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ly 28, 2003
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cartridges or 3
1
/2-inch diskettes.IRS/MCC no longer accepts 8mm, 4mm, or Quarter-Inch Cartridges (QIC) for the processing of
information returns. This Revenue Procedure must be used for the preparation of Tax Year2003information returns and information
returnsfortaxyearspriorto2003filed beginning January 1, 2004, and postmarked by December 1, 2004. Specifications for filing
the following forms are contained in this Revenue Procedure.
(a)Form 1098, Mortgage Interest Statement
(b)Form 1098–E, Student Loan Interest Statement
(c)Form 1098–T, Tuition Statement
(d)Form 1099–A, Acquisition or Abandonment of Secured Property
(e)Form 1099–B, Proceeds From Broker and Barter Exchange Transactions
(f)Form 1099–C, Cancellation of Debt
(g)Form 1099–CAP, Changes in Corporate Control and Capital Structure
(h)Form 1099–DIV, Dividends and Distributions
(i)Form 1099–G, Certain Government Payments
(j)Form 1099–H, Health Insurance Advance Payments
(k)Form 1099–INT, Interest Income
(l)Form 1099–LTC, Long-Term Care and Accelerated Death Benefits
(m)Form 1099–MISC, Miscellaneous Income
(n)Form 1099–MSA, Distributions From an Archer MSA or Medicare+Choice MSA
(o)Form 1099–OID, Original Issue Discount
(p)Form 1099–PATR, Taxable Distributions Received From Cooperatives
(q)Form 1099–Q, Qualified Tuition Program Payments (Under Section 529)
(r)Form 1099–R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
(s)Form 1099–S, Proceeds From Real Estate Transactions
(t)Form 5498,IRA Contribution Information
(u)Form 5498–ESA, Coverdell ESA Contribution Information
(v)Form 5498–MSA, Archer MSA or Medicare+Choice MSA Information
(w)Form W–2G, Certain Gambling Winnings
.02All 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 areformatted and coded according to this Revenue Procedure.
.03Specifications for filing Forms W–2, Wage and Tax Statements, magnetically/electronically areonlyavailable from the Social
Security Administration (SSA). Filers can call 1–800–SSA–6270 to obtain the telephone number of the SSA Employer Service Liaison
Officer for their area.
.04IRS/MCC doesnotprocess Forms W–2. Paperand/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.
.05Generally, the box numbers on the paper forms correspond with the amount codes used to file electronically/magnetically;
however, if discrepancies occur, the instructions in this Revenue Procedure govern.
.06This Revenue Procedure also provides the requirements and specifications for electronic or magnetic media filing under the
Combined Federal/State Filing Program.
.07The following Revenue Procedures and publications provide more detailed filing procedures for certain information returns:
(a)2003 General Instructions for Forms 1099, 1098, 5498, and W–2Gand individual form instructions.
(b)Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498, and W–2G
(c)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, Magnetically or Electronically
(d)Publication 1187, Specifications for Filing Form 1042–S, Foreign Person’s U.S. Source Income Subject to Withholding,
Magnetically or Electronically
(e)Publication 1245, Specifications for Filing Form W–4, Employee’s Withholding Allowance Certificate, Magnetically or
Electronically.
.08This Revenue Procedure supersedes Rev. Proc. 2002–34 published as Publication 1220 (Rev. 7–2002), Specifications for
Filing Forms 1098, 1099, 5498, and W–2G Electronically or Magnetically.
Sec. 2. Nature of Changes—Current Year (Tax Year2003)
.01In this publication, all pertinent changes for Tax Year2003are emphasized by the use ofitalics. Portions of text that require
special attention are in boldface text. Filers are always encouraged to read the publication in its entirety.
.02 Programming Changes
a. General
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(1)IRS/MCC no longer accepts 8mm, 4mm, and Quarter-Inch Cartridges (QIC).
(2)The state of Ohio has joined the Combined Federal/State Filing Program. Their state code is 39. See Part A, Sec. 13.
(3)It is recommended thattestdata be postmarked no later than December 1 in order for media to arrive by December 15 for
processing.
b. Programming Changes — Transmitter “T” Record
(1)For all forms, Payment Year, Field Positions 2–5, must be incremented to update the four-digit report year(2002 to 2003),
unless reporting prior year data.
(2)The processing ofcurrentyear data (2003) ends during December 2004. Media postmarked December 1, 2004, or later
musthave the Prior Year Data Indicator coded with a “P” in position 6 of the Transmitter “T” Record.
(3)A new field, Vendor Foreign Entity Indicator, in position 740 was added. Use this indicator when the Vendor is a foreign
entity with a foreign address. When this indicator is used, the Vendor address, city, state and ZIP fields may be free format-
ted to accommodate a foreign address.
c. Programming Changes — Payer “A” Record
(1)For all forms, Payment Year, Field Positions 2–5, must be incremented to update the four-digit report year(2002 to 2003),
unless reporting prior year data.
(2)The Amount Codes field was expanded to positions 28–41. Two new Amount Codes, “D” and “E” were added. Amount
Code “D” is used for 1099–H and Amount Codes “D” and “E” are for 1099–DIV.
(3)A new Form 1099–CAP, Changes in Corporate and Capital Structure, was added to the list of Type of Return, Field Position
27, and was given a code of “P”.
(4)The Amount Codes, Field Positions 28–41, for 1099–CAP are 3 (three), Cash Received, 4 (four), Federal Income Tax
Withheld, 8 (eight), Fair Market Value of Stock Received and 9 (nine), Fair Market Value of Other Property Received.
(5)A new Form 1099–H, Health Insurance Advance Payments, was added to the list of Type of Return, Field Position 27, and
was given a code of “J”.
(6)The Amount Codes, Field Positions 28–41, for 1099–H are 1 (one), Gross amount of health insurance advance payments,
2 (two), Amount of advance payment for January, 3 (three), Amount of advance payment for February, 4 (four), Amount
of advance payment for March, 5 (five), Amount of advance payment for April, 6 (six), Amount of advance payment for
May, 7 (seven), Amount of advance payment for June, 8 (eight), Amount of advance payment for July, 9 (nine), Amount of
advance payment for August, A, Amount of advance payment for September, B, Amount of advance payment for October,
C, Amount of advance payment for November, and D, Amount of advance payment for December.
(7)A new Form 5498–ESA, Coverdell ESA Contribution Information, was added to the list of Type of Return, Field Position
27, and was given a code of “V”.
(8)The Amount Codes, Field Positions 28–41, for 5498–ESA are 1 (one), Coverdell ESA contributions, and 2 (two), Rollover
contributions.
(9)Two additional Amount Codes, Field Positions 28–41, were added for Form 1099–B. Amount Code A is for Post -
05/05/2003 profit or (loss) realized, and B is for Post - 05/05/2003 aggregate profit or (loss).
(10) Form 1099–DIV, Dividends and Distributions, was revised extensively. Descriptions for Amount Codes are totally
different from previous years. See Part D, Sec. 5 for details on the changes.
(11)For Form 1098–T, Amount Codes were rewritten to correspond more closely to the paper Form 1098–T.
d. Programming Changes — Payee “B” Record
(1)For all forms, Payment Year, Field Positions 2–5, must be incremented to update the four-digit report year(2002 to 2003),
unless reporting prior year data.
(2)Payer’s Account Number For Payee is now a required field. This information is critical in the correction process, especially
when more than one information return is filed for a payee.
(3)Additional Payment Amount Fields D and E were created in Field Positions 199–210 and 211–222. This is to accommodate
the fourteen Amount Codes for the revised Form 1099–DIV.
(4)For Form 1099–H, Field Positions 547–548, Number of Months Eligible, was created to report total number of months of
insurance advance payments for the year.
(5)For Form 1099–CAP, Field Positions 544–750, provide specific formatting for the following information: Second TIN
Notice, Gross Proceeds Indicator, Date of Exchange, CUSIP Number, Description, Number of Shares Exchanged, Class of
Stock,andFiledByBrokerIndicator.
(6)For Form 1099–R, Distribution Code M and H were deleted from the table of acceptable distribution codes. The combina-
tion of distribution codes “2” and “L” are no longer valid. A new distribution code of “Q”, for early distributions from Roth
IRA, was added. Other code descriptions and combinations have changed.Please review all information pertaining to
1099–R Distribution Codes carefully.
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(7)For Form 5498, the Coverdell ESA Indicator was deleted in Field Position 552. This information is now reported on the
new Form 5498–ESA. A new indicator was added in position 551 for reporting required minimum distributions (RMD)
from an IRA.
(8)For Form 1099–Q, Type of Tuition Payment, Field Position 548, an additional indicator of 3 was added for ESA contribu-
tions.
e. Programming Changes — End of Payer “C” Record
(1)An additional Control Total D field, positions 232–249, was added to accommodate new Payment Amount Field D.
(2)An additional Control Total E field, positions 250–267, was added to accommodate new Payment Amount Field E.
f. Programming Changes— State Totals “K” Record
(1)An additional Control Total D field, positions 232–249, was added to accommodate new Payment Amount Field D.
(2)An additional Control Total E field, positions 250–267, was added to accommodate new Payment Amount Field E.
.03 Editorial Changes
(1)Form 5498 was renamed IRA Contribution Information
(2)Form 1098–T was renamed Tuition Statement
Sec. 3. Where To File and How to Contact the IRS, Martinsburg Computing Center
.01All information returns filed electronically or magnetically are processed at IRS/MCC. Files containing information returns
and requests for IRS electronic and magnetic media filing information should be sent to the following address:
IRS-Martinsburg Computing Center
Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
.02 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 o
f Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03The telephone numbers for magnetic media inquiries or electronic submissions are:
CUSTOMER SERVICE SECTION
TOLL-FREE 1–866–455–7438 or outside the U.S. 1–304–263–8700
email atm
ccirp@irs.gov
304–267–3367 — TDD
(Telecommunication Device for the Deaf)
304–264–5602 — Fax Machine
Electronic Filing — FIRE system
304–262–2400
TO OBTAIN FORMS:
1–800–TAX–FORM (1–800–829–3676)
www.irs.gov — IRS Website access to forms (See Note.)
Note: Because the IRS processes paper forms by machine (optical character recognition equipment), you cannot file the
IRS Form 1096 or Copy A of Forms 1098, 1099, 5498, or W–2G printed from the IRS Website.
.04The2003 General Instructions for Forms 1099, 1098, 5498, and W–2Gand the individual form instructions have been included
in the Publication 1220 for your convenience. Form 1096 is used only to transmit Copy A ofpaperForms 1099, 1098, 5498, and
W–2G. If filing paper returns, follow the mailing instructions on Form 1096 and submit the paper returns to the appropriate IRS
Service Center.
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.05Make requests for paper Forms 1096, 1098, 1099, 5498, and W–2G, and publications related to electronic/magnetic filing by
calling the IRS toll-free number1–800–TAX–FORM (1–800–829–3676) or on the IRS Website at www.irs.gov.
.06Questions pertaining to magnetic media filing of Forms W–2mustbe directed to the Social Security Administration (SSA).
Filers can call 1–800–772–6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.
.07Payersshould 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 telephone number for contact purposes;
or, the payer may be instructed to respond in writing to the address provided. IRS/MCC doesnotissue penalty notices and doesnot
have the authority to abate penalties. For penalty information, refer to the Penalties section of the2003 General Instructions for Forms
1099, 1098, 5498, and W–2G.
.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 calling1–800–TAX–FORM
(1–800–829–3676). For any questions regarding this form, call 1–800–829–1040.
.09The Information Reporting Program Customer Service Section (IRP/CSS), located at IRS/MCC, answers electronic/magnetic
media, paper filing, and tax law questions from the payer community relating to the filing of business information returns (Forms
1096, 1098, 1099, 5498, 8027, W–2G, and W–4). IRP/CSS also answers questions relating to the electronic/magnetic media filing
of Forms 1042–S and to the tax law criteria and paper filing instructions for Forms W–2 and W–3. Inquiries dealing with backup
withholding and reasonable cause requirements due to missing and incorrect taxpayer identification numbers are also addressed by
IRP/CSS. Assistance is available year-round to payers, transmitters, and employers nationwide, Monday through Friday, 8:30 a.m.
to 4:30 p.m. Eastern time, by calling toll-free1–866–455–7438or via email atm
ccirp@irs.gov.Do not include SSNs or EINs on
emails since this is not a secure line. The Telecommunications Device for the Deaf(TDD)toll number is304–267–3367.Callas
soon as questions arise to avoid the busy filing seasons at the end of January and February. Recipients of information returns (payees)
should continue to contact 1–800–829–1040 with any questions on how to report the information returns data on their tax returns.
.10Form 4419, Application for Filing Information Returns Electronically/Magnetically, Form 8809, Request for Extension of Time
to File Information Returns, and Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media may be faxed
to IRS/MCC at 304–264–5602. Form 4804, Transmittal of Information Returns Filed Magnetically must always be included with
media shipments.
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 electroni-
cally/magnetically.The 250* or more requirement applies separately for each type of return and separately to each type of
corrected return.
*Even though filers may submit up to 249 information returns on paper, IRS encourages filers to transmit those informa-
tion returns electronically or magnetically.
.02All filing requirements that follow apply individually to each reporting entity as defined by its separate Taxpayer Identification
Number (TIN), Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification Number
(ITIN) or Adoption Taxpayer Identification number (ATIN). For example, if a corporation with several branches or locations uses the
same EIN, the corporation must aggregate the total volume of returns to be filed for that EIN and apply the filing requirements to each
type of return accordingly.
.03Payers who are required to submit their information returns on magnetic media may choose to submit their documents by
electronic filing. Payers, who submit their information returns electronically by March 31,2004, are considered to have satisfied the
magnetic media filing requirements.
.04IRS/MCC has one method for filing information returns electronically; see Part B.
.05The following requirements apply separately to both originals and corrections filed electronically/magnetically:
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1098
1098–E
1098–T
1099–A
1099–B
1099–C
1099–CAP
1099–DIV
1099–G
1099–H
1099–INT
1099–LTC
1099–MISC
1099–MSA
1099–OID
1099–PATR
1099–Q
1099–R
1099–S
5498
5498–ESA
5498–MSA
W–2G
250 or more of anyof these forms require magnetic media filing with IRS. Filing electronically
will also meet this requirement. These are stand-alone documents and are not to be aggregated
for purposes of determining the 250 threshold. For example, if you must file 100 Forms 1099–B
and 300 Forms 1099–INT, Forms 1099–B need not be filed electronically or magnetically since
they do not meet the threshold of 250. However, Forms 1099–INT must be filed electronically or
magnetically since they meet the threshold of 250.
.06The above requirements do not apply if the payer establishes undue hardship (See Part E, Sec. 5).
Sec. 5. Vendor List
.01IRS/MCC prepares a list of vendors who support electronic or magnetic media filing. The Vendor List (Pub. 1582) contains
the names of service bureaus that will produce files via electronic filing or on the prescribed types of magnetic media. It also contains
the names of vendors who provide software packages for payers whowish to produce electronic files or magnetic media on their own
computer systems. This list is compiled as a courtesy and in no way implies IRS/MCC approval or endorsement.
.02If 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 ourtoll-free number 1–866–455–7438or by letter (See Part A, Sec. 3). The Vendor List is also available
ontheIRSWebsiteatwww.irs.gov.
.04A vendor, who offers a software package, or has the capability to electronically file information returns, or has the ability to
produce magnetic media for customers, and who would like to be included on the list, must submit a letter or email to IRS/MCC. The
request should include:
(a)Company name
(b)Address (include city, state, and ZIP code)
(c)Telephone and FAX number (include area code)
(d)Email address
(e)Contact person
(f)Type(s) of service provided (e.g., service bureau and/or software)
(g)Type(s) of media offered (e.g., tape cartridge, 3
1
/2-inch diskette, or electronic filing)
(h)Type(s)ofreturn(s)
Sec. 6. Form 4419, Application for Filing Information Returns Electronically/Magnetically
.01Transmitters are required to submit Form 4419, Application for Filing Information Returns Electronically/Magnetically, to
request authorization to file information returns with IRS/MCC. A single Form 4419 should be filed no matter how many types of
returns the transmitter will be submitting electronically/magnetically. For example, if a transmitter plans to file Forms 1099–INT,
one Form 4419 should be submitted. If, at a later date, another type of form (Forms 1098, 1099, 5498 and W–2G) is to be filed, the
transmitter does not need to submit a new Form 4419.
Note: EXCEPTIONS — An additional Form 4419 is required for filing each of the following types of returns: Form
1042–S, Foreign Person’s U.S. Source Income Subject to Withholding, Form 8027, Employer’s Annual Information Return of
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Tip Income and Allocated Tips, and Form W–4, Employee’s Withholding Allowance Certificate. See the back of Form 4419
for detailed instructions.
.02Tape cartridge, diskette, and electronically filed returns may not be submitted to IRS/MCC until the application has been ap-
proved. Please read the instructions on the back of Form 4419 carefully. Form 4419 is included in the Publication 1220 for the filer’s
use. This form may be photocopied. Additional forms may be obtained by calling1–800–TAX–FORM (1–800–829–3676).The
form is also available on the IRS Website atwww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) will be assigned and included in an approval
letter. The TCCmustbe coded in the Transmitter “T” Record. IRS/MCC uses the TCC to identify payer/transmitters and to track
their files through the processing system. The same TCC can be used regardless of the method of filing. For example, a payer may
send their production data on a tape cartridge and then later file a correction file electronically. The same TCC can be used for each
filing.
.04IRS/MCC encourages transmitters who file for multiple payers to submit one application and to use the assigned TCC for all
payers. While not encouraged, multiple TCCs can be issued to payers with multiple TINs. If a transmitter uses more than one TCC
to file, each TCC must be reported in separate transmissions if filing electronically or on separate media if filing magnetically.
.05If a payer’s files are prepared by a service bureau, the payer may not need to submit an application to obtain a TCC. Some
service bureaus will produce files, code their own TCC in the file, and send it to IRS/MCC for the payer. Other service bureaus will
prepare the file and return the file to the payer for submission to IRS/MCC. These service bureaus may require the payer to obtain a
TCC, which is coded in the Transmitter “T” Record. Payers should contact their service bureaus for further information.
.06Form 4419 may be submitted anytime during the year; however, itmustbe submitted to IRS/MCC at least 30 days before the
due date of the return(s) for current year processing. This willallow 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 (See Part E, Sec. 5).
.07Once a transmitter is approved to file electronically/magnetically, it is not necessary to reapplyunless:
(a)The payer has discontinued filing electronically or magnetically for two consecutive years. The payer’s TCC may have been
reassigned by IRS/MCC. Payers who are aware the TCC assigned will no longer be used are requested to notify IRS/MCC
so these numbers may be reassigned.
(b)The payer’s files were transmitted in the past by a service bureau using the service bureau’s TCC, but now the payer has
computer equipment compatible with that of IRS/MCC and wishes to prepare his or her own files. The payer must request
a TCC by filing Form 4419.
.08In accordance with Regulations Section 1.6041–7(b), payments by separate departments of a health care carrier to providers of
medical and health care services may be reported on separate returns filed electronically or magnetically. In this case, the headquarters
will be considered the transmitter, and the individual departments of the company filing reports will be considered payers. A single
Form 4419 covering all departments filing electronically/magnetically should be submitted. One TCC may be used for all departments.
.09Annually, a Publication 1220 containing the current Revenue Procedure, forms, and instructions will be sent to the attention of
the contact person indicated on Form 4419. Additional copies can be obtained by downloading from the IRS Website atwww.irs.gov
or by calling 1–800–829–3676.
.10Ifanyof the information (name, TIN or address) on Form 4419 changes, please notify IRS/MCC in writing so the IRS/MCC
database can be updated. You may use our email address,mccirp@irs.gov, for basic name and address changes. IRS/MCC does not
recommend sending TIN information via email. A change in the method by which information returns are submitted is not information
that needs to be updated (e.g., diskette to electronic). The transmitter should include the TCC in all correspondence.
.11Approval to file does not imply endorsement by IRS/MCC of any computer software or of the quality of tax preparation services
provided by a service bureau or software vendor.
Sec. 7. Test Files
.01IRS/MCC encourages first time electronic or magnetic media filers to submit a test. Test files arerequiredfor filers wishing to
participate in the Combined Federal/State Filing Program. See Part A, Sec. 13, for further information on the Combined Federal/State
Filing Program.
.02The test filemustconsist of a sample of each type of record:
(a)Transmitter “T” Record (all fields marked required must include transmitter information)
(b)Payer “A” Record (must not be fictitious data)
(c)Multiple Payee “B” Records(at least 11 “B” Records per each “A” Record)
(d)End of Payer “C” Record
(e)State Totals “K” Record, if participating in the Combined Federal/State Filing Program
(f)EndofTransmission“F”Record
(See Part D for record formats.)
.03Use the Test Indicator “T” in Field Position 28 of the “T” Record to show this is a test file.
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.04IRS/MCC will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending a test
file will provide the opportunity to ensure their software reflects any programming changes.
.05Electronic tests may be submittedNovember 1, 2003, through February 15, 2004. See Part B, Sec. 4.03, for information on
electronic test results.
.06Tests submitted on magnetic media should bepostmarkedno earlier thanOctober 1, 2003, and no later than December 1,
2003.Testsmustbereceivedat MCC by December 15 in order to be processed. Test processing will not begin until November 1. For
tests filed on tape cartridge, and 3
1
/2-inch diskette, the transmitter must include the signed Form 4804 in the same package with the
corresponding magnetic media. The “TEST” box in Block 1 on Form 4804 must be marked and the external media label must denote
“TEST”.
.07IRS/MCC will send a letter of acknowledgment to indicate the magnetic media test results. Unacceptable magnetic media test
filers will receive a letter and/or documentation identifying the errors. Resubmission of magnetic media test files must bereceived
by IRS/MCC no later thanDecember 15, 2003.
TESTING PERIODS
MAGNETIC MEDIAELECTRONIC FILES
November 1, 2003, through December 15, 2003*
* Postmark media by Dec.1 in order for media to be
receivedat MCC by December 15
November 1, 2003, through February 15, 2004
Sec. 8. 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 except for replacements, when Form 4804 is not always necessary (See Part A, Sec. 10).
.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, however, an original signature is
required. When using computer-generated forms, be sure to clearlymark the tax year being reported. This will eliminate a telephone
communication from IRS/MCC to question the tax year.
.03Form 4804 may be signed by the payer or the transmitter, service bureau, paying agent, or disbursing agent (all hereafter referred
to as agent) on behalf of the payer. Failure to sign the affidavit on Form 4804 may delay processing or could result in the files being
unprocessed. An agent may sign Form 4804 if the agent has the authority to sign the affidavit under an agency agreement (either oral,
written, or implied) that is valid under state law and adds the caption “FOR: (name of payer).”
.04Although an authorized agent may sign the affidavit, the payer is responsible for the accuracy of Form 4804 and the returns
filed. The payer will be liable for penalties for failure to comply with filing requirements.
.05Multiple types of media may be submitted in a shipment. However, a separate Form 4804 must be submitted for each type of
media.
.06Current 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.
.07Filers 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 returns are due.
.08 Do not report duplicate information. If a filer submits returns electronically/magnetically, identical paper documents
must not be filed. This may result in erroneous penalty notices.
.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 formssection of this publication. If diskettes are used, be certain that
only MS-DOS compatible operating systems were used to prepare the diskettes.Non MS-DOS diskettes are no longer acceptable
at IRS/MCC.
.10When submitting files include the following:
(a)AsignedForm 4804
(b)External media label (created by filer) affixed to magnetic media
(c)IRB Box
oflabeled on outside of each package
.11IRS/MCC will not return media after successful processing. Therefore, if the transmitter wants proof that IRS/MCC received
a shipment, the transmitter should select a service with tracking capabilities or one that will provide proof of delivery. Do not use
special shipping containers for mailing media to IRS/MCC. Shipping containers will not be returned.
.12IRS/MCC will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an individual or
organization is legally required to submit.
.13 Payers should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for at
least 3 years from the reporting due date, with the exception of:
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(a)A 4-year retention period is required for all information returns when backup withholding is imposed.
(b)A financial entity must retain a copy of Form 1099–C, Cancellation of Debt, or have the ability to reconstruct the data
required to be included on the return, for at least 4 years from the date such return is required to be filed.
Sec. 9. Due Dates
.01The due dates for filing paper returns with IRS also apply to magnetic media. Filing of information returns is on a calendar
year basis, except for Forms 5498 and 5498–MSA, which are used to report amounts contributed during or after the calendar year (but
not later than April 15). The following due dates will apply to Tax Year2003:
Due Dates
Electronic FilingMagnetic Filing (See Note.)
Forms 1098, 1099, and W–2GForms 1098, 1099, and W–2G
Recipient Copy — February 2, 2004Recipient Copy — February 2, 2004
IRS Copy — March 31, 2004IRS Copy — March 1, 2004
Electronic/Magnetic Filing
Forms 5498*, 5498–MSA* and 5498–ESA**
IRS Copy — June 1, 2004
Participant Copy — June 1, 2004*
Participant Copy – April 30, 2004**
* Participants’ copies of Forms 5498 and 5498–MSA to furnish fair mar
ket value information — February 2, 2004
.02If 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.
.03Magnetic media returns postmarked by the United States Postal Service (USPS) on or before March 1, 2004, and delivered by
United States mail to the IRS/MCC after the due date, are treated as timely under the “timely mailing as timely filing” rule. Refer to
the2003 General Instructions for Forms 1099, 1098, 5498, and W–2G, When to File, located in the back of this publication for more
detailed information. Notice 97–26, 1997–1 C.B. 413, provides rules for determining the date that is treated as the postmark date.
For items delivered by a non-designated Private Delivery Service (PDS), the actual date of receipt by IRS/MCC will be used as the
filing date. For items delivered by a designated PDS, but through a type of service not designated in Notice 99–41, the actual date of
receipt by IRS/MCC will be used as the filing date. The timely mailing rule also applies to furnishing statements to recipients and
participants.
Note: Due to security regulations at MCC, the Internal Revenue police officers will only accept media from PDSs or couri-
ers from 7:00 a.m. to 5:00 p.m., Monday through Friday.
.04Use this Revenue Procedure to prepare information returns filed electronically or magnetically beginningJanuary 1, 2004,and
postmarked no later thanDecember 1, 2004.
.05Media postmarked December 2, 2004, or latermusthave the Prior Year Data Indicator coded with a “P” in position 6 of the
Transmitter “T” Record.
Sec. 10. Replacement Magnetic Media
Note: Replacement Electronic files is detailed in Part B, Sec. 5.
.01A replacement is an information return file sent by the filer attherequestofIRS/MCCbecause of errors encountered while
processing the filer’s original file or correction file. After the necessary changes have been made, the entire file must be returned for
processing along with the Media Tracking Slip (Form 9267)which was included in the correspondence from IRS/MCC.(See Note.)
Note: Filers should never send anything to IRS/MCC marked “Replacement” unless IRS/MCC has requested a replace-
ment file in writing or via the FIRE System.
.02Magnetic Media filers will receive a Media Tracking Slip (Form 9267), listing, and letter detailing the reason(s) their media
could not be processed. It is imperative that filers maintain backup copies and/or recreate capabilities for their information return files.
Open all correspondence from IRS/MCC immediately.
.03When possible, sample records identifying errors encountered will be provided with the returned information. It is the respon-
sibility of the transmitter to check the entire file for similar errors.
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.04Before sending replacement media, makecertain the following items are in place:
(a)Make the required changes noted in the enclosed correspondence and check entire file for other errors.
(b)Code Transmitter “T” record, in positions 21–22 for replacement. See Part D, Sec. 3.
(c)Code Payer “A” record in position 49 with “1” for replacement file. See Part D, Sec. 4.
(d)Enclose Form 9267, Media Tracking Slip, with your replacement media.
(e)Label your Media“Replacement Data”and indicate the appropriate Tax Year.
(f)Complete a new Form 4804if any of your information has changed.
.05Replacement files must be corrected and returned to IRS/MCC within 45 days from the date of the letter. Refer to Part B, Sec. 5
.05, for procedures for files submitted electronically. A penalty for failure to return a replacement file by the due date will be assessed
if the files are not corrected and returned within the 45 daysor if filers are notified by IRS/MCC of the need for a replacement file
more than two times.A penalty for intentional disregard of filing requirements will be assessed if a replacement file is not received.
(For penalty information, refer to the Penalty section of the2003 General Instructions for Forms 1099, 1098, 5498, and W–2G.)
Sec. 11. Corrected Returns
•Acorrectionis an information return submitted by the transmitter to correct an information return that was previously submitted
to and processed by IRS/MCC, but contained erroneous information.
•While we encourage you to file your corrections electronically/magnetically, you may file up to 249 paper corrections even
though your originals were filed electronically or magnetically.
•DO NOT SEND YOUR ENTIRE FILE AGAIN.Only send the information returns in need of correction.
•Information returns omitted from the original filemust notbe coded as corrections. Submit them under a separate Payer “A”
Record as original returns.
•Be sure to use the same Payee Account Number that was used on the original submission. The account number is used to match
a correction record to the original information return.
•Before creating your correction file, review the following guidelines chart carefully.
.01The magnetic media filing requirement of information returns of 250 or more applies separately to both original and corrected
returns.
E
X
A
M
P
L
E
If a payer has 100 Forms 1099–A to be corrected, they can be filed on paper because they
fall under the 250 threshold. However, if the payer has 300 Forms 1099–B to be corrected,
they must be filed electronically or magnetically because they meet the 250 threshold. If for
some reason a payer cannot file the 300 corrections electronically or magnetically, to avoid
penalties, a request for a waiver must be submitted before filing on paper. If a waiver is
approved for original documents, any corrections for the same type of return will be covered
under this waiver.
.02Corrections should be filedas soon as possible. Corrections filed after August 1 may be subject to the maximum penalty of
$50 per return. Corrections filed by August 1 may be subject to a lesser penalty. (For information on penalties, refer to the Penalties
section of the2003 General Instructions for Forms 1099, 1098, 5498, and W–2G.) However, if payers discover errors after August
1, they should file corrections, as prompt correction is a factor considered in determining whether the intentional disregard penalty
should be assessed or whether a waiver of the penalty for reasonable cause may be granted. All fields must be completed with the
correct information, not just the data fields needing correction. Submit corrections only for the returns filed in error, not the entire
file. Furnish corrected statementsto recipients as soon as possible.
Note: Do NOT resubmit your entire file as corrections. This will result in duplicate filing and erroneous notices may be
sent to payees. Submit only those returns which need to be corrected.
.03There are numerous types of errors, and in some cases, more than one transaction may be required to correct the initial error.
If the original return was filed as an aggregate, the filers must consider this in filing corrected returns.
.04The payee’s account number must be included on all correction records. This is especially important when more than one
information return of the same type is reported for a payee. The account number is used to determine which information return is
being corrected. It is vital that each information return reported for a payee have a unique account number. See Part D, Sec. 6,
Payer’s Account Number For Payee.
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.05Corrected returns may be included on the same media as original returns; however, separate “A” Records are required. Cor-
rected returns must be identified on Form 4804 and the external media label by indicating “Correction.” If filers discover that certain
information returns were omitted on their original file, they must not code these documents as corrections. The file must be coded
and submitted as originals.
.06If a payer realizes duplicate reporting has occurred, IRS/MCC should be contactedimmediatelyfor instructions on how to
avoid notices. The standard correction process will not resolve duplicate reporting.
.07If a payer discovers errors that affect a large number of payees, in addition to sending IRS the corrected returns and notifying
the payees, a letter containing the following information should be sent to IRS/MCC:
(a)Name and address of payer
(b)Type of error (please explain clearly)
(c)Tax year
(d)Payer TIN
(e)TCC
(f)Type of Return
(g)Number of Payees
(h)Filing method, paper, electronic, or magnetic media
This information will be forwarded to the appropriate office inan attempt to prevent erroneous notices from being sent to the
payees. The corrections must be submitted on actual information return documents or filed electronically/magnetically. Form 4804
must be submitted with corrected files submitted magnetically. If filing magnetically, provide the correct tax year in Block 2 of Form
4804 and on the external media label. All references to Form 4804 in the guidelines apply only to files submitted magnetically. Form
4804 is not required for electronic filing.
.08Prior 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”, “A”, and “B” Records. If filing electronically, a separate transmission must
be made for each tax year.
.09In general, filers should submit corrections for returns filed within the last 3 calendar years (4 years if the payment is a reportable
payment subject to backup withholding under section 3406 of the Code and also for Form 1099–C, Cancellation of Debt).
.10All paper returns, whether original or corrected, must be filed with the appropriate service center.
.11The “B” Record provides a 20-position field for a unique Payer’s Account Number for the Payee. If a payee has more than one
reporting of the same document type, it is vital that each reporting have a unique account number. This number will help identify the
appropriate incorrect return if more than one return is filed for a particular payee.Do not enter a TIN in this field.A payer’s account
number for the payee may be a checking account number, savings account number, serial number, or any other number assigned to
the payee by the payer that will distinguish the specific account. This number should appear on the initial return and on the corrected
return in order to identify and process the correction properly.
.12The record sequence for filing corrections is the same as for original returns.
.13Review the chart that follows. Errors normally fall under one of the two categories listed. Next to each type of error is a list of
instructions on how to file the corrected return.
Guidelines for Filing Corrected Returns Electronically/Magnetically
Error Made on the Original ReturnHow To File the Corrected Return
Note: References to Form 4804 apply to magnetically filed media only. Form 4804 is not required for files submitted
electronically through the FIRE System.
One transaction is required to make the following corrections properly. (See Note 3.)
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Guidelines for Filing Corrected Returns Electronically/Magnetically
1.A.Prepare a new Form 4804 that includes information
relating to this new file.
B.Mark “Correction” in Block 1 of Form 4804.
C.Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
D.Make a separate “A” Record for each type of return
and each payer being reported. Information in the
“A” Record may be the same as it was in the original
submission. However, remove the “1” (one) in Field
Position 48 and set the Correction File Indicator (Field
Position 50), to “1” (one).
E.
Original return was filed with one or more of the
following errors:
(a)Incorrect payment amount codes in the Payer “A”
Record
(b)Incorrect payment amounts in the Payee “B” Record
(c)Incorrect code in the distribution code field in the
Payee “B” Record
(d)Incorrect payee address
(e)Incorrect Direct sales indicator
The Payee “B” Records must show the correct record
information as well as a Corrected Return Indicator
Code of “G” in Field Position 6.
F.Corrected returns submitted to IRS/MCC using “G”
coded “B” Records may be on the same file as those
returns submitted without the “G” coded “B” Records;
however,separate “A” Records are required.
G.Prepare a separate “C” Record for each type of return
and each payer being reported.
H.The last record on the file will be the End of
Transmission “F” Record.
I.Indicate “Correction” on the external media label.
File layoutonestep corrections
Transmitter
“T”
Record
Payer
“A”
Record
“G”
coded
Payee “B”
Record
“G”
coded
Payee “B”
Record
End of Payer
“C”
Record
End of
Transmission
“F” Record
Guidelines for Filing Corrected Returns Electronically/Magnetically (Continued)
Error Made on the Original ReturnHow To File the Corrected Return
Two (2) separate transactions are required to make the following corrections properly.
Follow the directions for both Transactions 1 and 2. (See Note 2.)
DO NOT use the two step correction process to correct money amounts.
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Guidelines for Filing Corrected Returns Electronically/Magnetically (Continued)
Error Made on the Original ReturnHow To File the Corrected Return
2.Original return was filed with one or more of the
following errors:
Transaction 1:Identify incorrect returns.
A.Prepare a new Form 4804 that includes information
relatedtothisnewfile.
B.Mark “Correction” in Block 1 of Form 4804.
C.Prepare a new file. The first record on the file will be
the Transmitter “T” Record.
(a)No payee TIN (SSN, ITIN, ATIN or EIN)
(b)Incorrect payee TIN
(c)Incorrect payee name
(d)Wrong type of return indicator
D.Make a separate “A” Record for each type of return
and each payer being reported. The information in
the “A” Record will beexactlythesameasitwasin
the original submission with one exception; remove
the “1” from Field Position 48, and set the Correction
File Indicator (Field Position 50) to “1” (one).(See
Note 1.)
E.The Payee “B” Records must containexactly the
sameinformation as submitted previously,except,
insert a Corrected Return Indicator Code of “G” in
Field Position 6 of the “B” Records, and enter “0”
(zeros) in all payment amounts.(See Note 1.)
F.Corrected returns submitted to IRS/MCC using “G”
coded “B” Records may be on the same file as those
returns submitted with a “C” code;however, separate
“A” Records are required.
G.Prepare a separate “C” Record for each type of return
and each payer being reported.
H.Continue with Transaction 2 to complete the
correction.
Transaction 2:Report the correct information.
A.Make a separate “A” Record for each type of return
and each payer being reported. Remove the “1” in
FieldPosition48andsettheCorrectionFileIndicator
(Field Position 50), to “1” (one).
B.The Payee “B” Records must show the correct
information as well as a Corrected Return Indicator
Code of “C” in Field Position 6.
C.Corrected returns submitted to IRS/MCC usi
ng “C”
coded “B” Records may be on the same file as th
ose
returns submitted with “G” codes;however
,separate
“A” Records are required.
D.Prepare a separate “C” Record for each type of return
and each payer being reported.
E.The last record on the file will be the End of
Transmission “F” Record.
F.Indicate “Correction” on the external media label.
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Guidelines for Filing Corrected Returns Electronically/Magnetically (Continued)
Error Made on the Original ReturnHow To File the Corrected Return
Note 1: The Record Sequence Number will be different since this is a counter number
and is unique to each file. For
1099–R corrections, if the corrected amounts are zeros, certain indicators wil
l not be used.
Note 2: See the2003 General Instructions for Forms 1099, 1098, 5498, and W–2Gfor additional information on
regulations affecting corrections and related penalties.
File layouttwostep corrections
Transmitter
“T”
Record
Payer
“A”
Record
“G”
coded
Payee “B”
Record
“G”
coded
Payee “B”
Record
End of Payer
“C”
Record
Payer
“A”
Record
“C”
coded
Payee “B”
Record
“C”
coded
Payee “B”
Record
End of Payer
“C”
Record
End of
Transmission
“F” Record
Note 3: If a filer is correcting the name and/or TIN in addition to any errors listed in item 2 of the chart, two transactions
will be required. If a filer is reporting “G” coded, “C” coded, and/or “Non-coded” (original) returns on the same media, each
category must be reported under separate “A” Records.
Sec. 12. Effect on Paper Returns and Statements to Recipients
.01Electronic/Magnetic reporting of information returns eliminates the need to submit paper documents to the IRS.CAUTION:
Do not send Copy A of the paper forms to IRS/MCC for any forms filed electronically or magnetically.This will result in
duplicate filing; therefore, erroneous notices could be generated.
.02Payers are responsible for providing statements to the payees as outlined in the2003 General Instructions for Forms 1099,
1098, 5498, and W–2G. Refer to those instructions for filing information returns on paper with the IRS and furnishing statements to
recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications
and guidelines in Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 5498, and
W–2G.
Sec. 13. Combined Federal/State Filing Program
•Through the Combined Federal/State Filing (CF/SF) Program, IRS/MCC will forward original and corrected information re-
turns filed electronically or magnetically to participating states for approved filers.
•For approval, the filer must submit a test file coded for this program. See Part A, Sec. 7, Test Files.
•For magnetic media test files, attach a letter to Form 4804 requesting approval to participate in the CF/SF Program. Form 4804
or letter is not required for tests sent electronically.
•Approved filers are sent Form 6847, Consent for Internal Revenue Service to Release Tax Information, which must be com-
pleted and returned to IRS/MCC. A separate form is required for each payer.
.01The Combined Federal/State Filing (CF/SF) Program was established to simplify information returns filing for the taxpayer.
IRS/MCC will forward this information to participating states free of charge for approved filers. Separate reporting to those states is
not necessary. The following information returns may be filed under the Combined Federal/State Filing Program:
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Form 1099–DIV—Dividends and Distributions
Form 1099–G—Certain Government Payments
Form 1099–INT—Interest Income
Form 1099–MISC—Miscellaneous Income
Form 1099–OID—Original Issue Discount
Form 1099–PATR—Taxable Distributions Received From Cooperatives
Form 1099–R—Distributions From Pensions, Annuities, Retirement or
Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
Form 5498—IRA and Coverdell ESA Contribution Information
.02To request approval to participate, a magnetic media test file coded for this programmustbe submitted to IRS/MCC between
November l, 2003, and December 15, 2003. Media must bepostmarkedno later than December 1, 2003 in order to be received at
MCC by December 15 for processing. Electronic test files coded for this program must be submitted betweenNovember 1, 2003,and
February 15, 2004.
.03Attach a letter to Form 4804 submitted with the test file to indicate a desire to participate in the Combined Federal/State Filing
Program. Test files sent electronically do not require Form 4804 or letter. If the test file is coded for the Combined Federal/State Filing
Program and is acceptable, an approval letter and Form 6847, Consent For Internal Revenue Service to Release Tax Information, will
be sent to the filer.
.04A test file is only required for thefirstyear when you apply to participate in the Program. Each record, both in the test and the
actual data file, must conform to this Revenue Procedure.
.05If the test file is acceptable, IRS/MCC will send the filer an approval letter, and Form 6847, Consent for Internal Revenue
Service to Release Tax Information, which the payermustcomplete, sign, and return to IRS/MCC before any tax information can be
released to the state. Filers must write their TCC on Form 6847.
.06If the test file is not acceptable, IRS/MCC will send magnetic media filers information indicating the problems. Electronic
filers must dial back to the FIRE System within two business daysto check the acceptability of their test file. The new test file must
be postmarked no later than December 1, 2003 for magnetic media, or February 15, 2004, for an electronically filed test.
.07A separate Form 6847 isrequiredfor each payer. A transmitter may not combine payers on one Form 6847 even if acting
as Attorney-in-Fact for several payers. Form 6847 may be computer-generated as long as it includes all information that is on the
original form or it may be photocopied. If Form 6847 is signed by an Attorney-in-Fact, the written consent from the payer must clearly
indicate that the Attorney-in-Fact is empowered to authorize release of the information.
.08Only code the records for participating states and for those payers who have submitted Form 6847.
.09If a payee has a reporting requirement for more than one state, separate “B” records must be created for each state. Allocate
the gross payment of the reporting according to each state’s filing requirement. Donotreport the total amount to each state. This will
cause duplicate reporting.
.10Some participating states require separate notification that the payer is filing in this manner. Since IRS/MCC acts as a forward-
ing agent only, it is the payer’s responsibility to contact the appropriate states for further information.
.11All corrections properly coded for the Combined Federal/State Filing Program will be forwarded to the participating states.
.12Participating states and corresponding valid state codes are listed inTable 1of this section. The appropriate state codemust
be entered for those documents that meet the state filing requirements;do not use state abbreviations.
.13Each state’s filing requirements are subject to change by the state. It is the payer’s responsibility to contact the participating
states to verify their criteria.
.14Upon submission of the actual files, the transmittermustbe sure of the following:
(a)All records are coded exactly as required by this Revenue Procedure.
(b)A State Total “K” Record(s) for each state(s) being reported follows the “C” Record.
(c)Payment amount totals and the valid participating state code are included in the State Totals “K” Record(s).
(d)The last “K” Record is followed by an “A” Record or an End of Transmission “F” Record (if this is the last record of the
entire file).
Table 1. Participating States and Their Codes*
StateCodeStateCodeStateCode
Alabama01Indiana18Nebraska31
Arizona04Iowa19New Jersey34
Arkansas05Kansas20New Mexico35
California06Louisiana22North Carolina37
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Table 1. Participating States and Their Codes*
StateCodeStateCodeStateCode
Colorado07Maine23North Dakota38
Connecticut08Maryland24Ohio39
Delaware10Massachusetts25South Carolina45
District of Columbia11Minnesota27Virginia51
Georgia13Mississippi28Wisconsin55
Hawaii15Missouri29
Idaho16Montana30
* The codes listed above are correct for the IRS Combined Federal/State Filing Program and may not correspond to the state
codes of other Agencies or programs.
Sample File Layout for Combined Federal/State Filer
Transmitter “T”Payer “A”Payee “B”Payee “B”Payee “B”End of Payer
RecordRecord codedRecord withRecord withRecord no“C” Record
with 1 instate code 15state code 06state code
position 26in positionin position
747–748747–748
State Total “K”RecordState Total “K” RecordEnd of Transmission “F”
for “B” records coded 15.for “B” records coded 06.Record
“K” record coded 15 in“K” record coded 06 in
positions 747–748.positions 747–748.
Sec. 14. Penalties Associated With Information Returns
.01The following penalties generally apply to the person required to file information returns. The penalties apply to electronic/mag-
netic media filers as well as to paper filers.
.02 Failure To File Correct Information Returns by the Due Date (Section 6721).If you fail to file a correct information return
by the due date and you cannot show reasonable cause, you may be subject to a penalty. The penalty applies if you fail to file timely,
you fail to include all information required to be shown on a return, or you include incorrect information on a return. The penalty also
applies if you file on paper when you were required to file on magnetic media, you report an incorrect TIN or fail to report a TIN, or
you fail to file paper forms that are machine readable.
The amount of the penalty is based on when you file the correct information return. The penalty is:
•$15per information return if you correctly file within 30 days of the due date of the return (See Part A, Sec. 9 .01); maximum
penalty $75,000 per year ($25,000 for small businesses).
•$30per information return if you correctly file more than 30 days after the due date but by August 1; maximum penalty $150,000
per year ($50,000 for small businesses).
•$50per information return if you file after August 1 or you do not file required information returns; maximum penalty $250,000
per year ($100,000 for small businesses).
.03A late filing penalty may be assessed for a replacement file which is not returned by the required date. Files which require
replacement more than two times will also be subject to penalty. See Part A, Sec. 10, for more information on replacement files.
.04 Intentional disregard of filing requirements.If any failure to file a correct information return is due to intentional disregard
of the filing or correct information requirements, the penalty is at least $100 per information return with no maximum penalty.
.05 Failure To Furnish Correct Payee Statements (Section 6722).For information regarding penalties which may apply to failure
to furnish correct payee statements, see2003 General Instructions for Forms 1099, 1098, 5498, and W–2G.
Sec. 15. 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 only, and does not represent those states participating in the Combined Federal/State
Filing Program.
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StateCodeStateCodeStateCode
AlabamaALKentuckyKYNo. Mariana IslandsMP
AlaskaAKLouisianaLAOhioOH
American SamoaASMaineMEOklahomaOK
ArizonaAZMarshall IslandsMHOregonOR
ArkansasARMarylandMDPennsylvaniaPA
CaliforniaCAMassachusettsMAPuerto RicoPR
ColoradoCOMichiganMIRhode IslandRI
ConnecticutCTMinnesotaMNSouth CarolinaSC
DelawareDEMississippiMSSouth DakotaSD
District of ColumbiaDCMissouriMOTennesseeTN
Federated States of Micronesia FMMontanaMTTexasTX
FloridaFLNebraskaNEUtahUT
GeorgiaGANevadaNVVermontVT
GuamGUNew HampshireNHVirginiaVA
HawaiiHINew JerseyNJ(U.S.) Virgin IslandsVI
IdahoIDNew MexicoNMWashingtonWA
IllinoisILNew YorkNYWest VirginiaWV
IndianaINNorth CarolinaNCWisconsinWI
IowaIANorth DakotaNDWyomingWY
KansasKS
.02Filers must adhere to the city, state, and ZIP Code format for U.S. addresses in the “B” Record. This also includes American
Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern Mariana Islands, Puerto Rico, and the U. S. Virgin Islands.
.03For foreign country addresses, filers may use a 51 position free format which should include city, province or state, postal code,
and name of country in this order. This is allowable only if a “1” (one) appears in the Foreign Country Indicator, Field Position 247,
of the “B” Record.
.04When reporting APO/FPO addresses, use the following format:
EXAMPLE:
Payee NamePVT Willard J. Doe
Mailing AddressCompany F, PSC Box 100
167 Infantry REGT
Payee CityAPO (or FPO)
Payee StateAE, AA, or AP*
Payee ZIP Code098010100
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Sec. 16. Major Problems Encountered
IRS/MCC encourages filers to verify the format and content ofeach type of record to ensure theaccuracy of the data. This may
eliminate the need for IRS/MCC to request replacement files. This may be important for those payers who have either had their files
prepared by a service bureau or who have purchased preprogrammed software packages.
Filers who engage a service bureau to prepare media on their behalf should be careful not to report duplicate data, which
may generate penalty notices.
The Major Problems Encountered lists some of the most frequently encountered problems with electronic/magnetic files submitted
to IRS/MCC. These problems may result in IRS/MCC requesting replacement files. Some of the problems resulted from not referring
to this publication for instructions.
1. Incorrect Format
•Multiple Files on diskettes — Each diskette must contain onlyO
NEfile, namedIRSTAX. A file consists of one Transmitter
“T” Record followed by a Payer “A” Record, Payee “B” Records, End of Payer “C” Record, State Totals “K” Record (if
applicable for CF/SF Program), and the End of Transmission “F” Record. A file can contain multiple Payer “A” Records,
but, o
nlyoneTransmitter“T”Record.See Part D, Sec. 10, for file layout diagram.
•Invalid record length —A
LLRecords must be 750 Positions in length.
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•Prior tax year datamustbeformattedinthecurrenttax year format. Be sure to use thecurrent Revenue Procedure
(Publication 1220)for formatting prior tax year data.
2. Unable to read tape cartridge.
Please review all tape cartridge specifications carefully (See Part C, Sections 1 and 2.)
3. No Form 4804, Transmittal of Information Returns Reported Magnetically
Each shipment of media sent to IRS/MCC must include a signed Form 4804. More than one type of media may be sent in the
same shipment, (i.e., diskette, and tape cartridge) but must have a separate Form 4804 to accompanyeach type of media.
4. Discrepancy Between IRS/MCC Totals and Totals in Payer “C” Records
The “C” Record is a summary record for a type of return for agiven payer. IRS compares the total number of payees and
payment amounts in the “B” records with totals in the “C” Records. The two totalsm
ustagree. DoNOTenter negative
amounts except when reporting Forms 1099–B or1099–Q. Money amounts must be all numeric, right-justified and zero (0)
filled.Do Not Use Blanks.
5. The Payment Amount Fields in the “B” Record Do Not Correspond to the Amount Codes in the “A” Record
The Amount Codes used in the “A” recordM
USTcorrespond with the payment amount fields used in the “B” records. The amount
codes must be left-justified, in ascending order with the unused positions blank. For Example: If the “B” records show payment
amounts in payment amount fields 2, 4, and 7, then the “A” record must correspond with 2, 4, and 7 in the amount codes field.
6. Incorrect TIN in Payer “A” Record
The Payer’s TIN reported in positions 12–20 of the “A” record must be nine numeric characters only.(Do Not Enter Hyphen.)
The TIN and the First Payer Name Line provided in the “A” record must correspond.
7. Incorrect Tax Year in the Transmitter “T” Record, Payer “A” Record and the Payee “B” Records
The tax year in the transmitter, payer and payee records should reflect the tax year of the information return being reported. For
prior tax year data, there must be a “P” inposition 6 of the Transmitter “T” record.Media postmarked December 2, 2004, or later
musthave the Prior Year Data Indicator coded with a “P” in position 6 of the Transmitter “T” Record.This position must
be blank for current tax year data.
8. Incorrect Reporting of Form W–2 Information to IRS
Form W–2 information is submitted to SSA andnotto IRS/MCC.Any media received at IRS/MCC that contains W–2
information will be forwarded to SSA. The filer will be notified of this action by letter.To inquire about filing Form W–2
information magnetically/electronically, call 1–800-SSA–6270.
9. Incorrect use of Test Indicator
When sending a test file, position 28 of the Transmitter “T” record must contain a “T”, otherwise blank fill.
10. Incorrect Format for TINs in the Payee “B” Record
TINs entered in position 12–20 of the Payee “B” record must consist of nine numerics only.(Do Not Enter Hyphens.)Incorrect
formatting of TINs may result in a penalty.
Payers/Transmitters who submit data with missing TINs, and have taken the required steps to obtain this information are
encouraged to attach a letter of explanation to the required Form 4804. This letter, however, will not prevent backup withholding
notices (CP2100 and CP2100A Notices) or proposed penalties (Notice 972CG) for missing or incorrect TINs. For penalty
information, refer to the Penalties section of the2003 General Instructions for Forms 1099, 1098, 5498, and W–2G.
11. Distribution Codes for Form 1099–R Reported Incorrectly
For Forms 1099–R, there must be valid Distribution Code(s) in position 545–546 of the Payee “B” record. For valid codes (and
combinations), see Guide to Distribution Codes in Part D. If only one distribution code is required, it must be entered in position
545 and position 546 must be blank. A blank in position 545 is not acceptable.
12. Incorrect Record Totals Listed on Form 4804
The Combined Total Payee Records listed on Form 4804 (Block 6) are used in the verification process of information returns.
Thefigureinthisblockmustbe the total number of payee “B” records contained on each individual piece of media submitted.
A separate Form 4804 should be sent for each piece of media that contains a file.
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13. Missing Correction Indicator in Payee “B” Record
When a file is submitted as a correction file, there must be a correction indicator, “G” or “C” in position 6 of the Payee “B”
record. See Part A, Sec. 11.
PART B. ELECTRONIC FILING SPECIFICATIONS
Sec. 1. General
.01Electronic filing of Forms 1098, 1099, 5498, and W–2G information returns, originals, corrections, and replacements is of-
fered as an alternative to magnetic media (tape cartridge or diskette) or paper filing. Filing electronically will fulfill the magnetic
media requirements for those payers who are required to file magnetically. Payers who are under the filing threshold requirement,
are encouraged to file electronically. If the original file was sent magnetically, but IRS/MCC has requested a replacement file, the
replacement may be transmitted electronically. Also, if the original file was submitted via magnetic media, any corrections may be
transmitted electronically.
.02All electronic filing of information returns are received at IRS/MCC via the FIRE (Filing Information Returns Electronically)
System. The FIRE System can be accessed via analog and ISDN BRI connections. The system is designed to support the electronic
filing of information returns only. The telephone number for electronic filing is(304–262–2400).
.03The electronic filing of information returns is not affiliated with any other IRS electronic filing program. Filers must obtain
separate approval to participate in each of them. Only inquiries concerning electronic filing of information returns should be directed
to IRS/MCC.
.04Files submitted to IRS/MCC electronically must be in standard ASCII code. Do not send magnetic media or paper forms with
the same information as the electronically submitted files. This would create duplicate reporting resulting in penalty notices.
.05The record formats of the “T”, “A”, “B”, “C”, “K”, and “F” records are the same for both electronically or magnetically filed
records. See Part D, Record FormatSpecifications and Record Layouts.
Sec. 2. Advantages of Filing Electronically
Some of the advantages of filing electronically are:
(1)Paperless, no Form 4804 requirements.
(2)Results available within 1–2 workdays regarding the acceptability of the data transmitted. It is the filer’s responsibility to
dial back in and check results.
(3)Later due date than magnetic media or paper for electronically filed Forms 1098, 1099, and W–2G (refer to Part A, Sec.
9.01).
(4)Allows more attempts than magnetic media filing to replace bad files within a specific time frame before imposing penalties
(refer to Part B, Sec. 5.05).
(5)Better customer service due to on-line availability of transmitter’s files for research purposes.
(6)Extended period to test electronic files: November 1, 2003 to February 15, 2004.
Sec. 3. Electronic Filing Approval Procedure
.01Filers must obtain a Transmitter Control Code (TCC) prior to submitting files electronically. Filers who currently have a TCC
for magnetic media filing may use their assigned TCC for electronic filing. Refer to Part A, Sec. 6, 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 B, Sec. 6, for more information on the PIN.
.03If a filer is submitting files for more than one TCC, it is not necessary to create a separate logon and password for each TCC.
.04For all passwords, it is the user’s responsibility to remember the password and not allow the password to be compromised.
Passwords are user assigned at first logon and must be 8 alpha/numerics containing at least 1 uppercase, 1 lowercase, and 1 numeric.
However, filers forget their password or PIN, calltoll-free 1–866–455–7438for assistance. The FIRE System requires users to change
their passwords on a yearly basis.
Sec. 4. 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 Year2003(returns to be filed in2004), itmustbe
submitted to IRS/MCCno earlier thanNovember 1, 2003, andno later thanFebruary 15, 2004.
.02Filers who encounter problems while transmitting the electronic test file can contact IRS/MCCtoll-free at 1–866–455–7438
for assistance.
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.03Filers must verify the status of the transmitted test data by connecting to the FIRE System at304–262–2400. This information
will be available within 1–2 workdays after the transmission is received by IRS/MCC.
.04Form 4804 is not required for test files submitted electronically. See Part B, Sec. 6.
.05 A test file is required from filers who want approval for the Combined Federal/State Filing Program. See Part A, Sec.
13, for further details.
Sec. 5. Electronic Submissions
.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 callingtoll-free at 1–866–455–7438.
.02 The FIRE System will be down from December 24, 2003, through January 5, 2004.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 compression.
The following are transmission rates achieved in test uploads at MCC using compressed files. The transmission rates will vary
depending on the modem speeds.
Transmission
Speed in bps
1000 Records10,000 Records100,000 Records
19.2K34 Sec.6Min.60 Min.
56K20 Sec.3
1
/2Min.33 Min.
128K (ISDN)8 Sec.1Min.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 filename assigned by the FIRE System will consist of submission type (TEST, ORIG [original], CORR
[correction], and REPL [replacement]), the filer’s TCC and a four-digit number sequence. The sequence number will be incremented
for every file sent. For example, if it is your first original file for the calendar year and your TCC is 44444, the IRS assigned filename
would be ORIG.44444.0001.Record the filename. This information will be needed by MCC to identify the file, if assistance is
required.
.05If a file was submitted timely and is bad, the filer will have up to 60 days from the day the file was transmitted or 4 replacement
attempts within that 60 day period, whichever comes first, to transmit an acceptable file. If an acceptable file is not received within
60 days or within 4 replacement attempts, then the payer could be subject to late filing penalties. This only applies to files originally
submitted electronically.
.06The following definitions have been provided to help distinguish between a correction and a replacement:
•Acorrectionis an information return submitted by the transmitter to correct an information return that was previously submitted
to and processed by IRS/MCC, but contained erroneous information.(See Note.)
Note: Corrections should only be made to records that ha
ve been submitted incorrectly, not the entire file.
•Areplacementis an information return file sent by the filer because FILE STATUS on the FIRE System indicated the original
file was bad. After the necessary changes have been made, the file must be transmitted through the FIRE System. (See Note.)
Note: Filers should never transmit anything to IRS/MCC as a “Replacement” file unless FILE STATUS on the FIRE Sys-
tem indicates the file is bad.
.07The TCC in the Transmitter “T” Record must be the TCC used to transmit the file; otherwise, the file will be considered an
error.
.08The volume of filers accessing the FIRE System peaks during the last weeks and days of February and March. If you wait to
download your files until these peak times, you may receive a busy signal. If you do, please keep trying and make sure you have dialed
the correct number, 304–262–2400, and used the proper number to access an outside line (e.g. 8 or 9). Also, some companies require
an access code for long distance dialing. Contacting the Customer Service Section will not expedite your access to the FIRE System.
We encourage you to prepare and download your files during less busy times in February and March.
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Sec. 6. PIN Requirements
.01Form 4804 is not required for electronic files. Instead, the user will be prompted to create a PIN consisting of 10 numerics
when establishing their initial logon name and password.
.02The PIN is required each time a file is sent electronically and is permission to release the file. An authorized agent may enter
their PIN, however, the payer is responsible for the accuracy of the returns. The payer will be liable for penalties for failure to comply
with filing requirements. If you forget your PIN, please calltoll-free 1–866–455–7438for assistance.
.03If the file is good, it is released for mainline processing after 10 calendar days from receipt. Contact ustoll-free 1–866–455–7438
within this 10-day period if there is a reason the file should not be released for further processing. If the file is bad, follow normal
replacement procedures.
Sec. 7. Electronic Filing Specifications
.01The FIRE System is designed exclusively for the filing of Forms 1042–S, 1098, 1099, 5498, 8027, W–2G and Question-
able W–4.
.02A transmitter must have a TCC (see Part A, Sec. 6) before a file can be transmitted. A TCC assigned for magnetic media filing
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 1–2 business days.
It is the filer’s responsibility to dial back to verify the acceptability of files submitted by checking the file status area of the system.
Forms 1042–S, 8027 and Questionable W–4 require a longer processing time.
.04Connect to the FIRE System by dialing304–262–2400. This number supports analog connections from 1200bps to 56Kbps or
ISDN BRI 128Kbps. The system can be accessed via Dial-up network/web browser (see Part B, Sec. 8) or communications software
such as HyperTerminal, Procomm, PCAnywhere or other VT100 emulation products (see Part B, Sec. 9). The Dial-up network/web
browser (point-to-point) will provide an Internet-like look, however, it is not the Internet.
Sec. 8. Dial-up Network/Browser Specifications (Web Interface)
.01Dial-up network settings for Windows 2000 and XP — Disable the LCP extension and Software Compression by going to your
Dial-up Networking Properties, Networking and Settings.
.02When running Norton Internet Security or similar software, you may need to disable this feature if your file transfer does not
complete properly.
.03Before dialing, have your TCC and EIN available.
.04Due 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 software, the following instructions are based upon Windows
2000. Other versions may vary slightly.
W
eb-likeInterface
SelectPrograms
Accessories
Communications
Network and Dial-Up Connections
F
irsttimeconnectingwithDial-UpNetwork(If you have logged on previously, skip to Subsequent Dial-up Network
Connections.)
Select“Make new connection”.
Click“Next”.
Select“Dial-Up a private Network”.
Click“Next”.
Enter area code 304 and telephone number 262–2400 and any other special dialing codes you
require.
Click“Next”.
Type the name you want to use for this connection.
Click“Finish”.
Normally, a user name and password is not required at this time unless local procedures call for
it,therefore,enterblanks.
Click“Properties”.
Click“Networking”.
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FirsttimeconnectingwithDial-UpNetwork(If you have logged on previously, skip to Subsequent Dial-up Network
Connections.)
Click“Settings”.
Disable“LCP extensions”and“Software Compression”.
Click“OK”.
Click“OK”.
Click“Dial”.
When you receive the message that you have connected to our system, launch your Web Browser
(remember, you are not connecting via the Internet — this is a point-to-point connection).
In the URL Address enterhttp://10.225.224.2and pressENTER.
S
ubsequentDial-UpNetworkconnections
Click“Dial”.
If prompted for user name and password, leave blank unless local procedures require 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 enterhttp://10.225.224.2and pressENTER.
F
irsttimeconnectiontoTheFIRESystem(If you have logged on previously, skip to Subsequent Connections to the FIRE
System.)
Click“Create New Account”.
Fill out the registration form and click“Submit”.
Enter yourlogon name(most users logon with their first and last name).
Enter yourpassword(the password is user assigned and must be 8 alpha/numerics, containing
at least 1 uppercase, 1 lowercase and 1 numeric). FIRE will force you to change the password
once a year.
Complete the online survey by choosing one of the options.
Click“Create”.
If you receive the message“account created”, click“OK”.
Enter your 10 digit self-assigned PIN (Personal Identification Number) and verify.
Click“Submit”.
If you receive the message“Your PIN has been successfully created!”,click“OK”.
Read the bulletin(s) and/or click“Start the FIRE application”.
S
ubsequentconnectionstoTheFIRESystem
Click“Log On”.
Enter yourlogon name(most users logon with their first and last name).
Enter yourpassword(the password is user assigned and is case sensitive).
At Menu Options:
Click“Information Returns”
Enter yourTCC:
Enter yourEIN:
Click“Submit”.
The system will then display the company name, address, city, state, ZIP code and phone number.
This information will be used to contact or sendcorrespondence (if necessary) regarding this
transmission. Update as appropriate and/or Click“Accept”.
Click one of the following:
Original File
Correction File
Test File
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SubsequentconnectionstoTheFIRESystem
Replacement File(if you select this option, select one of the following):
FIRE Replacement(file was originally transmitted on this system)
Click file to be replaced.
Magnetic Media Replacement File
Enter the alpha character from Form 9267, Media Tracking Slip, tha
twas
sent with the request for replacement file.
Click“Submit”.
Enter your 10 digit PIN.
Click“Submit”.
Enter thedrive/path/filenameof the file you want to upload or click“Browse”to locate the file.
Click“Upload”.
When the upload is complete, the screen will display the total bytes received and tell you the name of the file you just
uploaded.
If you have more files to upload for that TCC:
Click“File Another?”;other
wise,
Click“Main Menu”.
It is your responsibility to check the acceptability of your file; therefore, be
sure to dial back into the system in 1–2 business days.
At the Main Menu:
Click“File Stats”.
Enter yourTCC:
Enter yourEIN:
Click“Search”.
If “Results” indicate:
“Good, Not Released”and you agree with the “Count of Payees”, you
are finished with this file. The file will automatically be released after 10
calendar days unless you contact us within this timeframe.
“File Released”— File has been released to our mainline processing.
“File Bad”— Correct the errors and timely resubmit the file as a
“replacement”.
“Not Yet Processed”— File has been received, but we do not have results
available yet. Please check back in a few days.
Click on the desired file for a detailed report of your transmission.
When you are finished, click onMain Menu.
Click“Logoff”.
Close your Web Browser.
I
MPORTANT
Go back into your Dial-Up Network and click “hang-up”; otherwise, you may stay connected and incur unnecessary phone charges.
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Sec. 9. Communications Software Specifications (Text Interface)
.01Communications software settings must be:
–No parity
–Eight data bits
–One stop bit
.02Terminal Emulation must be VT100.
.03Before dialing, have your TCC and EIN available.
.04Due 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 software, the following instructions are based on Windows
2000. Other versions may vary slightly.
T
extInterface
SelectPrograms
Accessories
Communications
HyperTerminal
A box will appear titled“New Connection”.
En
ter a name and choose an iconfor the connection:
Country Code:United States of America
Area Code:304
Phone Number:262–2400
Click“OK”.
(If you need to modify the phone number, click modify, remove the “
” from use country/region code and
area code. Enter the area code, phone numbers and/or any special access codes in the phone number box.)
Click“OK”.
Click“Dial”.
A“Connect”box will appear to show the status.
Once you have connected to The FIRE System, if you do not get a menu within a few seconds, press the
ENTERkey one time.
Press“1”to connect to the system.
Read the information notice and/or pressENTERto continue.
F
irstTimeLogon
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.
L
ogonNameandPassword
Logon Name:Enter a logon name. Most users enter their first and last name as the logon name.
Password:Enter a password (the password is user assigned and must be 8 alpha/numerics, containing at least 1
uppercase, 1 lowercase and 1 numeric). FIRE will force you to change the password once a year.
After entering the password and completing the survey, pressENTER.
Enter your 10 digit self-assigned PIN (Personal Identification Number) and verify. Enter“y”to create the PIN. If
successful, you will receive a message that the PIN creation has been completed. PressENTER.
Read the information notice and/or pressENTER.
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TransferringYourElectronicFile
From the Main Menu:
Enter“A”for Electronic Filing.
Enter“A”for Forms 1098, 1099, 5498, W–2G, 1042–S, 8027 and Questionable Forms W–4.
Press the Tab key to advance to TCC box; otherwise, enter“E”to exit.
Enter yourTCC:
Enter yourEIN:
The system will then display the company name, address, city, state, ZIP code and phone number. This information
will be used to contact or send correspondence (if necessary) regarding this transmission. If you need to update,
enter“n”to correct; otherwise, enter“y”to accept.
Select one of the following:
“A”for an Original file
“B”for a Replacement file
“C”for a Correction file
“D”for a Test file
If you selected “B” for a replacement file, select one of the following:
“A”Replacement Files For This System
This option is to replace an original/correction file that was submitted electronically on this
system, but was bad and needs to be replaced. Select the file needing replaced.
“B”Magnetic Media Replacement Files
Enter the alpha character from Form 9267, Media Tracking Slip, that was sent with the request
for replacement file.
PressENTERto continue or“e”to exit.
Enter your 10-digit PIN and pressENTER
Choose one of the following protocols (HyperTerminal is normally set to Zmodem by default. Donotuse Zmodem
with crash recovery.):
X— Xmodem
Y— Ymodem
Z— Zmodem (Zmodem will normally give you the fastest transfer rate.)
At this point, you must start the upload from your PC.
To send a file:
Go to the HyperTerminal menu bar.
Click on“Transfer”.
Click on“Send File”.(Be sure the protocol selected matches the protocol selected earlier. If
Zmodem was selected, set to ZmodemnotZmodem with crash recovery.)
A box will appear titled“Send File”.
Enter the drive/path/filename or click on“Browse”to locate your file.
Click on“Send”.
When the upload is complete, the screen will display the total bytes received and the name IRS assigned to your file.
PressENTERto continue.
If you have more files to send for the same TCC/EIN, enter“y”; otherwise, enter“n”.
It is your responsibility to check the acceptability of your file; therefore, be
sure to dial back into the system in 1–2 business days.
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At the Main Menu:
Enter“B”for file status.
Press the Tab key to advance to TCC box; otherwise, enter“E”to exit.
Enter yourTCC:
Enter yourEIN:
Enter“B”for the current year file results.
Tab to the appropriate file and pressENTER.
If “Results” indicate:
“Good, Not Released”and you agree with the “Count of Payees”, you are finished with this
file. The file will automatically be released after 10 calendar days unless you contact us within
this timeframe.
“File Released”—File has been released to our mainline processing.
“File Bad”— Correct the errors an
d timely resubmit the file as a replacement.
“Not Yet Processed”— File has been received, but we do not have results available yet. Please
check back in a few days.
Select the desired file for a detailed report of your transmission.
When you are finished, enter“E”fromtheMainMenutologoff.
Enter“2”to hang-up.
Sec. 10. Modem Configuration
.01Hardware features
(a)Enable hardware flow control
(b)Enable modem error control
(c)Enable modem compression
Sec. 11. Common Problems and Questions Associated with Electronic Filing
.01Refer to Part A, Sec. 16, for common format errors associated with electronic/magnetic files.
.02The following are the major errors associated with electronic filing:
N
ON-FORMATERRORS
1. Transmitter does not dial back to the electronic system to determine file acceptability.
The results of your file transfer are posted to the FIRE System within two business days. It is your responsibility to verify file
acceptability and, if the file contains errors, you can get an online listing of the errors. Date received and number of payee records
are also displayed. If the file is good, but you do not want the file processed, you must contact IRS/MCC within 10 calendar days
from the transmission of your file.
2. Incorrect file is not replaced timely.
If your file is bad, correct the file and timely resubmit as a replacement.
3. Transmitter compresses several files into one.
Only compress one file at a time. For example, if you have 10 uncompressed files to send, compress each file separately and
send 10 separate compressed files.
4. Transmitter sends a file and File Status indicates that the file is good, but the transmitter wants to send a replacement or
correction file to replace the original/correction/replacement file.
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Once a file has been transmitted, you cannot send a replacement file unless File Status indicates the file is bad (1–2 business days
after file was transmitted). If you do not want us to process the file, you must first contact ustoll-free at 1–866–455–7438to
see if this is a possibility.
5. Transmitter sends an original file that is good, then sends a correction file for the entire file even though there are
only a few changes.
The correction file, containing the proper coding, should only contain the records needing correction, not the entire file.
6. File is formatted as EBCDIC.
All files submitted electronically must be in standard ASCII code.
7. Transmitter has one TCC number, but is filing for multiple companies, which EIN should be used when logging
into the system to send the file?
When sending the file electronically, you will need to enter the EIN of the company assigned to the TCC. When you upload the
file, it will contain the EINs for the other companies that you are filing for. This is the information that will be passed forward.
8. Transmitter sent the wrong file, what should be done?
Call us as soon as possibletoll-free at 1–866–455–7438,ext. 3. We may be able to stop the file before it has been processed.
Please do not send a replacement for a file that is marked as a good file.
CONNECTINGWITHDIAL-UPNETWORKING/WEBBROWSERERRORS
1. I am receiving the error message “Remote PPP Peer Not Responding” or receiving a 718 error with Windows 2000 or XP.
Disable“enable LCP Extensions”and“Software Compression”in Dial-Up Networking. (This is located in Dial-up
Networking Properties, Networking, and Settings.)
2. Transmitter is connecting using dial-up networking, but i
s unable to bring up the URL address using the web browser.
• Proxy server should be disabled for a dial-up connection.
•“Using a modem”option should be selected.
• The home page should either displayhttp://10.225.224.2or be set to“about:blank”.
• The security level should be set at medium.
• The option“enable software compression”should be disabled under Dial-Up Networking.
3. Transmitter clicks on “Start the FIRE application”, but the logon screen is displayed again.
Your browser must be set to receive“cookies”.
4. Transmitter is getting a menu when connecting with dial-up networ
king.
The option“pop-up a terminal window”should be disabled.
5. Thelineisbusywhendialed.
The volume of filers accessing the FIRE System peaks during the last weeks and days of February and March. If you wait to
download your files until these peak times, you may receive a busy signal. If you do, please keep trying and make sure you have
dialed the correct number, 304–262–2400, and used the proper number to access an outside line (e.g. 8 or 9). Also, some
companies require an access code for long distance dialing. Contacting the Customer Service Section will not expedite your
access to the FIRE System. We encourage you to prepare and download your files during less busy times in February and March.
CONNECTINGWITHHYPERTERMINALERRORS
1. Transmitter is unable to connect using HyperTerminal.
• If you need a number such as an 8 or a 9 to access an outside line, make sure it is present.
• Set the terminal emulation to VT100.
• Try lowering the modem speed.
• Turn the modem off and then back on to reset it.
(Make sure you are using analog lines rather than digital.)
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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 disto
rted.
The terminal emulation must be set to VT100. Also, verify that the data bits are set at 8, the stop bit is set at 1 and parity is
setatNone.
4. Transmitter was able to connect and the menu is displayed, but is unable to type anything.
Scroll lock cannot be turned on.
5. When transmitter connects, the menus keep scrolling and display garbage characters.
Make sure“Use error control”and“Compress data”are enabled under the Advanced Connection Settings.
6. Transmitter receives message “bad data packet” when the file is transmitting. What does this mean?
Your modem is having problems sending the data, so it is trying to resend the bad data packet. Normally, if the transfer does not
abort, the file will be sent successfully.
PART C. MAGNETIC MEDIA SPECIFICATIONS
.01Transmitters should be consistent in the use of recording codes 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/MCCtoll-free at 1–866–455–7438for further information. Transmitters should also check media for viruses before submitting
it to IRS/MCC.
Sec. 1. 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 that are approximately 4-inches by 5-inches by 1-inch
in dimension.
(2)Magnetic tape will be chromium dioxide particle based
1
/2-inch tape.
(3)Cartridges must be 18-track, 36-track, 128-track or 256-track parallel (See Note).
(4)Cartridges will contain 37,871 CPI, 75,742 CPI, or 3590 CPI (characters per inch).
(5)Mode will be full function.
(6)The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02The tape cartridge records defined in this Revenue Procedure may be blocked subject to the following:
(a)Ablockmust notexceed 32,250 tape positions.
(b)If the use of blocked records would result in a short block, all remaining positions of the block must be filled with 9s;
however, the last block of the file may be filled with 9s or truncated.Do not pad a block with blanks.
(c)All records, except the header and trailer labels, may be blocked or unblocked. A record may not contain any control fields
or block descriptor fields, which describe the length of the block or the logical records within the block. The number of
logical records within a block (the blocking factor) must be constant in every block with the exception of the last block,
which may be shorter (see item (b) above). The block length must be evenly divisible by 750.
(d)Records may not span blocks.
.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.
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Note: Filers should indicate on the external media label whether the cartridge is 18-track, 36-track, 128-track or 256-track.
Sec. 2. 3
1
/2-Inch Diskette Specifications
.01To be compatible, a diskette file must meet the following specifications:
(a)3
1
/2-inches in diameter.
(b)Datamustbe recorded in standard ASCII code.
(c)Records must be a fixed length of 750 bytes per record.
(d)Delimiter character commas (,) must not be used.
(e)Positions 749 and 750 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applicable.
(f)Filename of IRSTAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,
the filename IRSTAX will contain a three-digit extension. This extension will indicate the sequence of the diskettes within
the file. For example, if the file consists of three diskettes, the first diskette will be named IRSTAX.001, the second will
be IRSTAX.002, and the third will be IRSTAX.003. The first diskette, IRSTAX.001 will begin with a “T” Record and the
third diskette, IRSTAX.003 will have an “F” Record at the end of the file.
(g)A diskette can not contain multiple files. A file can have onlyONETransmitter “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 mb96tpihd512
1.44 mb135tpihd512
.02IRS/MCC encourages transmitters to use blank or currently formatted diskettes when preparing files. If extraneous data follows
the End of Transmission “F” Record, IRS/MCC will request a replacement file.
.03IRS/MCC willonlyaccept 3
1
/2-inch diskettes created using MS-DOS.
.04 3
1
/2-inch diskettes created on a System 36 or iSeries(AS400) are notacceptable.
PART D. RECORD FORMAT SPECIFICATIONS AND RECORD LAYOUTS
Sec. 1. General
.01The specifications contained in this part of the Revenue Procedure define the required formation and contents of the records to
be included in the electronic or magnetic media files.
.02A provision is made in the “B” Records for entries which are optional. If the field is not used, enter blanks to maintain a fixed
record length of 750 positions. Each field description explains the intended use of specific field positions.
Sec. 2. Transmitter “T” Record — General Field Descriptions
.01The Transmitter “T” Record identifies the entity transmitting the electronic/magnetic media file and contains information which
is critical if it is necessary for IRS/MCC to contact the filer.
.02The Transmitter “T” Record is the first record on each file and is followed by a Payer “A” Record. A file format diagram is
located at the end of Part D. A replacement file will be requested by IRS/MCC if the “T” Record is not present. For transmitters with
multiple diskettes, refer to Part C, Sec. 2, 3
1
/2-Inch Diskette Specifications.
.03For all fields marked“Required”, the transmitter must provide the information described under Description and Remarks.
For those fields not marked“Required”, a transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated field positions and for the indicated length.
.04All records must be a fixed length of 750 positions.
.05All alpha characters entered in the “T” Record must be upper-case, except email addresses which may be case sensitive.Do
notuse punctuation in the name and address fields.
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Record Name: Transmitter “T” Record
Field
Position
Field TitleLength Description and Remarks
1Record Type1Required.Enter “T.”
2–5Payment Year4Required.Enter “2003” (unless reporting prior year data; report the year which
applies [2001, 2002 etc.] and set the Prior Year Data Indicator in field position 6).
6Prior Year Data
Indicator
1Required.Enter “P”onlyif reporting prior year data; otherwise, enter blank.
Do not enter a “P” if tax year is2003.(SeeNote.)
Note: Current year data mailed December 2 or later must be coded with a “P”. Current year processing ends in De-
cember and programs are converted for the next processing year.
7–15Transmitter’s TIN9Required.Enter the transmitter’s nine-digit Taxpayer Identifi
cation Number
(TIN). May be an EIN, SSN or ITIN.
16–20Transmitter Control
Code
5Required.Enter the five-character alpha/numeric Transmitter Control Code
(TCC) assigned by IRS/MCC. A TCC must be obtained to file data with this
program.
21–22Replacement Alpha
Character
2Required for replacement files only.Enter the alpha/numeric character which
appears immediately following the TCC number on the Media Tracking Slip
(Form 9267). Form 9267 accompanies correspondence sent by IRS/MCC when
files can not be processed. This field must be blank unless a replacement file has
been requested. If the file is being replaced magnetically, information is required
in this field. If the file was originally sent magnetically, but the replacement is
being sent electronically, the informationisrequiredinthisfield.Otherwise,
leave blank for electronic files. Left-justify information and fill unused positions
with blanks.If this is not a replacement file, enter blanks.
23–27Blank5Enter blanks.
28Test File Indicator1Required for test files only.Enter a “T” if this is a test file; otherwise, enter
ablank.
29Foreign Entity
Indicator
1Enter a “1” (one) if the transmitter is a foreign entity. If the transmitter is not a
foreign entity, enter a blank.
30–69Transmitter Name40Required.Enter the name of the transmitter in the man
ner in which it is used in
normal business. Left-justify and fill unused posi
tions with blanks.
70–109Transmitter Name
(Continuation)
40Required.Enter any additional information that may be part of the name.
Left-justify information and fill unused positions with blanks.
110–149Company Name40Required.Enter the name of the company to be associated with the address
where correspondence should be sent.
150–189Company Name
(Continuation)
40Enter any additional information that may be part of the name of the company
where correspondence should be sent.
190–229Company Mailing
Address
40Required.Enter the mailing address where correspondence should be sent.
Note: Any correspondence relating to problem media or electronic files will be sent to this address. This should be
the same address as in box 5 of Form 4804.
For U.S. addresses,the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers must
adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter information
in the following order: city, province or state, postal code, and the name of the country. When reporting a foreign address, the
Foreign Entity Indicator in position 29 must contain a “1” (one).
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Record Name: Transmitter “T” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
230–269Company City40Required.Enter the city, town, or post office where correspondence should
be sent.
270–271Company State2Required.Enter the valid U.S. Postal Service state abbreviation. Refer to the
chart for valid state codes in Part A, Sec. 15.
272–280Company ZIP Code9Required.Enter the valid nine-digit ZIP assigned by the U. S. Postal Service.
If only the first five digits are known, left-justify information and fill unused
positions with blanks.
281–295Blank15Enter blanks.
296–303Total Number of
Payees
8Enter the total number of Payee “B” Records reported in the file. Right-justify
information and fill unused positions with zeros.
304–343Contact Name40Required.Enter the name of the person to be contacted if IRS/MCC encounters
problems with the file or transmission.
344–358Contact Phone
Number & Extension
15Required.Enter the telephone number of the person to contact regarding
electronic or magnetic files. Omit hyphens. If no extension is available,
left-justify information and fill unused positions with blanks. For example, the
IRS/MCC Customer Service Section phone number of866–455–7438with an
extension of52345would be866455743852345.
359–393Contact Email
Address
35Required if available.Enter the email address of the person to contact regarding
electronic or magnetic files. Left-justify information. If no email address is
available, enter blanks.
394–395Cartridge Tape File
Indicator
2Required for tape cartridge filers only.Enter the letters “LS” (in uppercase
only). Use of this field by filers using other types of media will be acceptable
but is not required.
396–410Electronic File Name
For a Replacement
File
15Required.Use for an electronic file which “FILE STATUS” has indicated was
rejected. Enter the ORIGINAL or CORRECTION electronic file name assigned
by the IRS electronic FIRE System. If you are sending an original, correction, or
test file, enter blanks.
EXAMPLE: If you have sent an original file, the TCC is 44444 and it is your first original file, then the filename would be
ORIG.44444.0001
411–416Transmitter’s Media
Number
6For magnetic media filers only. If your organization uses an in-house numbering
system to identify media, enter that number; otherwise, enter blanks.
417–499Blank83Enter blanks.
500–507Record Sequence
Number
8Required.Enter the number of the record as it appears within your file. The
record sequence number for the “T” record will always be “1” (one), since it
is the first record on your file and you can have only one “T” record in a file.
Each record, thereafter, must be incremented by one in ascending numerical
sequence,i.e., 2, 3, 4, etc. Right-justify numbers with leading zeroes in the field.
For example, the “T” record sequence number would appear as “00000001”
in the field, the first “A” record would be “00000002”, the first “B” record,
“00000003”, the second “B” record, “00000004” and so on until you reach the
final record of the file, the “F” record.
508–517Blank10Enter blanks.
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Record Name: Transmitter “T” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
518Vendor Indicator1Required.Enter the appropriate code from the table below to indicate if your
software was provided by a vendor or produced in-house.
I
ndicatorUsage
VYour software was purchased from a vendor or other source.
IYour software was produced by in-house programmers.
Note: In-house programmer is defined as an employee or a hired contract programmer. If your software is produced
in-house, the following Vendor information fields are not required.
519–558Vendor Name40Required.Enter the name of the company from whom you purchased your
software.
559–598Vendor Mailing
Address
40Required.Enter the mailing address.
For U.S. addresses,the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers must
adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter information in
the following order: city, province or state, postal code, and the name of the country.
599–638Vendor City40Required.Enter the city, town, or post office.
639–640Vendor State2Required.Enter the valid U.S. Postal Service state abbreviation. Refer to the
chart of valid state codes in Part A, Sec. 15.
641–649Vendor ZIP Code9Required.Enter the valid nine-digit ZIP Code assigned by the U.S. Postal
Service. If only the first five digits are known, left-justify information and fill
unused positions with blanks.
650–689Vendor Contact Name40Required.Enter the name of the person who can be contacted concerning any
software questions.
690–704Vendor Contact
Phone Number &
Extension
15Required.Enter the telephone number of the person to contact
concerning
software questions. Omit hyphens. If no extension is availa
ble, left-justify
information and fill unused positions with blanks.
705–739Vendor Contact Email
Address
35Required.Enter the email address of the person to contact concerning software
questions. Left-justify information and fill unused positions with blanks.
740Vendor Foreign
Entity Indicator
1Enter a “1” (one) if the vendor is a foreign entity. Otherwise, enter a blank.
741–748Blank8Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed characters (CR/LF).
Sec. 3. Transmitter “T” Record — Record Layout
Record
Type
Payment
Year
Prior Year
Data
Indicator
Transmitter’s
TIN
Transmitter
Control
Code
Replacement
Alpha
Character
Blank
12–567–1516–2021–2223–27
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Test File
Indicator
Foreign
Entity
Indicator
Transmitter
Name
Transmitter
Name
(Continuation)
Company
Name
Company
Name
(Continuation)
282930–6970–109110–149150–189
Company
Mailing
Address
Company
City
Company
State
Company
ZIP
Code
BlankTotal
Number
of Payees
Contact
Name
190–229230–269270–271272–280281–295296–303304–343
Contact
Phone
Number &
Extension
Contact
Email
Address
Cartridge
Tape File
Indicator
Electronic
File
Name For a
Replacement
File
Transmitter’s
Media
Number
BlankRecord
Sequence
Number
344–358359–393394–395396–410411–416417–499500–507
BlankVendor
Indicator
Vendor
Name
Vendor
Mailing
Address
Vendor
City
Vendor
State
508–517518519–558559–598599–638639–640
Vendor ZIP
Code
Vendor
Contact
Name
Vendor
Contact
Phone
Number &
Extension
Vendor
Contact
Email
Address
Vendor
Foreign
Entity
Indicator
BlankBlank or
CR/LF
641–649650–689690–704705–739740741–748749–750
Sec. 4. Payer “A” Record — General Field Descriptions
.01The Payer “A” Record identifies the person making payments, a recipient of mortgage or student loan interest payments, an
educational institution, a broker, a person reporting a real estate transaction, a barter exchange, a creditor, a trustee or issuer of any
IRA or MSA plan, and a lender who acquires an interest in secured property or who has a reason to know that the property has been
abandoned. The payer will be held responsible for the completeness, accuracy, and timely submission of electronic/magnetic files.
.02The second record on the file must be an “A” Record. A transmitter may include Payee “B” records for more than one payer
in a file. However,each groupof “B” records must be preceded by an “A” Record and followed by an End of Payer “C” Record. A
single file may contain different types of returns but the types of returnsmust notbe intermingled. A separate “A” Record is required
for each payer and each type of return being reported.
.03The number of “A” Records depends on the number of payers and the different types of returns being reported. Do not submit
separate “A” Records for each payment amount being reported. For example, if a payer is filing Form 1099–DIV to report Amount
Codes 1, 2, and 3, all three amount codes should be reported under one “A” Record, not three separate “A” Records.
.04The maximum number of “A” Records allowed on a file is 90,000.
.05All records must be a fixed length of 750 positions.
.06All alpha characters entered in the “A” Record must be upper case.
.07For all fields marked“Required”, the transmitter must provide the information described under Description and Remarks.
For those fields not marked“Required”, a transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated media position(s) and for the indicated length.
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ly 28, 2003
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8
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03-30 I.R.B.

Record Name: Payer “A” Record
Field
Position
Field TitleLength Description and Remarks
1Record Type1Required.Enter an “A.”
2–5Payment Year4Required.Enter “2003” (unless reporting prior year data; report the year which
applies [2001, 2002, etc.]).
6–11Blank6Enter blanks.
12–20Payer’s
Taxpayer
Identification
Number (TIN)
9Required.Must be the valid nine-digit Taxpayer Identification Number assigned to
the payer.Do not enter blanks, hyphens, or alpha characters.All zeros, ones,
twos, etc., will have the effect of an incorrect TIN.
Note: For foreign entities that are not required to have a TIN, this f
ield must be blank. However, the Foreign Entity
Indicator, position 52 of the “A” Record, must be set to “1”(one).
21–24Payer Name
Control
4The Payer Name Control can be obtained only from the mail label on the Package
1099 that is mailed to most payers each December. Package 1099 contains Form
7018 C, Order Blank for Forms, and the mail label on the package contains a
four (4) character name control. If a Package 1099 has not been received, you can
determine you name control using the following simple rules or you can leave the
field blank. For a business, use the first four significant characters of the business
name. Disregard the word “the” when it is the first word of the name, unless there are
only two words in the name. A dash (-) and an ampersand (&) are the only acceptable
special characters. Names of less than four (4) characters should be left-justified,
filling the unused positions with blanks.
25Last Filing
Indicator
1Enter a “1” (one) if this is thelast yearthis payer name and TIN will file information
returns electronically, magnetically or on paper; otherwise, enter blank.
26Combined
Federal/State
Filer
1Required for the Combined Federal/State Filing Program.Enter “1” (one) if
approved to participate in the Combined Federal/State Filing Program; otherwise,
enter blank.
Note: If you entered one in this field position, be sure to code the Payee “B” Records with the appropriate state code.
Refer to Part A, Sec. 13, for further information.
27Type of Return1Required.Enter the appropriate code from the table below:
T
ypeofReturnCode
10983
1098–E2
1098–T8
1099–A4
1099–BB
1099–C5
1099–CAPP
1099–DIV1
1099–GF
1099–HJ
1099–INT6
1099–LTCT
1099–MISCA
1099–MSAM
1099–OIDD
1099–PATR7
1099–QQ
1099–R9
1099–SS
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9
Ju
ly 28, 2003

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
5498L
5498–ESAV
5498–MSAK
W–2GW
28–41Amount Codes
(See Note.)
14Required.Enter the appropriate amount codes for the type of return being reported.
In most cases, the box numbers on paper information returns correspond with the
amount codes used to file electronically or magnetically. However, if discrepancies
occur, this Revenue Procedure governs. Enter the amount codes in ascending
sequence, left-justify, and fill unused positions with blanks.
Note: A type of return and an amount code must be present in every Payer “A” Record even if no money amounts are
being reported. For a detailed explanation of the informationto be reported in each amount code, refer to the appropriate
paper instructions for each form.
Amount CodesForm 1098—Mortgage
Interest Statement
For Reporting Mortgage Interest Received From Payers/Borrowers (Payer of Record)
on Form 1098:
Amount
C
odeAmountType
1Mortgage interest received from payer(s)/borrower(s)
2Points paid on purchase of principal residence
3Refund (or credit) of overpaid interest
4Blank (Filer’s use)
Amount CodesForm 1098–E— Student
Loan Interest
For Reporting Interest on Student Loans on Form 1098–E:
Amount
C
odeAmountType
1Student loan interest received by lender
Amount CodesForm 1098–T— Tuition
Payments Statement
For Reporting Tuition Payments on Form 1098–T:
See the2003 Instructions for Form
1098–E and Tfor further information
A
mount
CodeAmountType
1Payments received for qualified tuition and related
expenses
2Amounts billed for qualified tuition and related expenses
3Adjustments made for prior year
4Scholarships or grants
5Adjustments to scholarships or grants for a prior year
7Reimbursements or refunds of qualified tuition and
related expenses from an insurance contract
Amount CodesForm 1099–A—
Acquisition or Abandonment of Secured
Property
For Reporting the Acquisition or Abandonment of Secured Property on Form
1099–A:
Amount
C
odeAmountType
2Balance of principal outstanding
See the2003 Instructions for Forms
1099–A and 1099–Cfor further
information on coordination with Form
1099–C
4Fair market value of propert
y
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ly 28, 2003
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Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For Reporting Payments on Form 1099–B:
Amount
C
odeAmountType
2Stocks, bonds, etc. (For forward contracts,SeeNote1.)
3Bartering (Do not report negative amounts.)
4Federal income tax withheld (backup withholding) (Do
not report negative amounts.)
6Profit (or loss) realized in2003
7Unrealized profit (or loss) on open contracts —
12/31/2003(See Note 2. )
8Unrealized profit (or loss) on open contracts —
12/31/2003(See Note 2. )
9Aggregate profit (or loss)(See Note.)
APost — 05/05/2003 Profit of (loss) realized
Amount CodesForm 1099–B—
Proceeds From Broker and Barter
Exchange Transactions
BPost — 05/05/2003 Aggregate profit or (loss)
Note 1: The payment amount field associated with Amount Code 2 may be used to report a loss from a closing
transaction on a forward contract. Refer to the “B” Record — General Field Descriptions and Record Layouts, Payment
Amount Fields, for instructions on reporting negative amounts.
Note 2: Payment Amount Fields 6, 7, 8, and 9 are to be used for the reporting of regulated futures or foreign
currency contracts.
For Reporting Payments on Form 1099–C:
Amount
C
ode
AmountType
2Amount of debt canceled
3Interest, if included in Amount Code 2
Amount CodesForm 1099–C—
Cancellation of Debt
7Fair market value of property(SeeNote.)
Note: Use Amount Code 7 only if a combined Form 1099–A and 1099–C is being filed.
For Reporting Payments on Form 1099–CAP:
Amount
C
odeAmountType
3Cash received
4Federal income tax withheld
8Fair market value of stock received
Amount CodesForm 1099–CAP—
Changes in Corporate Control and
Capital Structure
9Fair market value of other property received
Amount CodesForm 1099–DI
V—
Dividends and Distribut
ions
For Reporting Payments on
Form 1099–DIV:
See the2003 Instructions for Form
1099–DIVfor further information
Amount
C
odeAmountType
1Total ordinary dividends
2Qualified dividends
3Total capital gain distributions
4Post — May 5 capital gain distributions
5Qualified 5-year
gain
6Unrecaptured Section 1250 gain
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ly 28, 2003

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
7Section 1202 gain
8Collectibles (28%) gain
9Nontaxable distributions
AFederal income tax withheld
BInvestment expenses
CForeign tax paid
DCash liquidation distribution
ENon-cash liquidation distribution
For Reporting Payments on Form 1099–G:
Amount
C
odeAmountType
1Unemployment compensation
2State or local income tax refunds, credits, or offsets
4Federal income tax withheld (backup withholding or
voluntary withholding on unemployment compensation
or Commodity Credit Corporation Loans, or certain crop
disaster payments)
6Taxable grants
Amount CodesForm 1099–G— Certain
Government Payments
7Agriculture payments
For Reporting Payments on Form 1099–H:
Amount
C
odeAmountType
1Gross amount of health insurance advance payments
2Amount of advance payment for January
3Amount of advance payment for February
4Amount of advance payment for March
5Amount of advance payment for April
6Amount of advance payment for May
7Amount of advance payment for June
8Amount of advance payment for July
9Amount of advance payment for August
AAmount of advance payment for September
BAmount of advance
payment for October
CAmount of advance payment for November
Amount CodesForm 1099–H— Health
Insurance Advance Payments
DAmount of advance payment for December
Amount CodesForm 1099–INT—
Interest Income
For Reporting Payments on Form 1099–INT:
Amount
C
odeAmountType
1Interest income not included in Amount Code 3
2Early withdrawal penalty
3Interest on U.S. Savings Bonds and Treasury obligations
4Federal income tax withheld (backup withholding)
5Investment expenses
6Foreign tax paid
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ly 28, 2003
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Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For Reporting Payments on Form 1099–LTC:
Amount
C
odeAmountType
1Gross long-term care benefits paid
Amount CodesForm 1099–LTC—
Long-Term Care and Accelerated Death
Benefits
2Accelerated death benefits paid
For Reporting Payments on Form 1099–MISC:
Amount
C
odeAmountType
1Rents
2Royalties(SeeNote2.)
3Other income
4Federal income tax withheld (backup withholding or
withholding on Indian gaming profits)
5Fishing boat proceeds
6Medical and health care payments
7Nonemployee compensation
8Substitute payments in lieu of dividends or interest
ACrop insurance proceeds
BExcess golden parachute payments
Amount CodesForm 1099–MISC—
Miscellaneous Income(SeeNote1.)
CGross proceeds paid to an attorney in connection with
legal services
Note 1: When using the Direct Sales Indicator in position 547 of the Payee “B” Record, use Type of Return Code A
and Amount Code 1 in the Payer “A” Record. All payment amount fields in the Payee “B” Record will contain zeros.
Note 2: Do not report timber royalties under a “pay-as-cut” contract; these must be reported on Form 1099–S.
For Reporting Distributions from an Archer Medical Savings Account or
Medicare+Choice MSA on Form 1099–MSA:
Amount
C
odeAmountType
1Grossdistribution
2Earnings on excess contributions
Amount CodesForm 1099–MSA—
Distributions From an Archer MSA or
Medicare+Choice MSA
4Fair market value of the account o
n date of death
Amount CodesForm 1099–OID—
Original Issue Discount
For Reporting Payments on Form 1099–OID:
Amount
C
odeAmountType
1Original issue discount fo
r2003
2Other periodic interest
3Early withdrawal penalty
4Federal income tax withheld (backup withholding)
6Original issue discount on U.S. Treasury Obligations
See the2003 Instructions for Forms
1099–INT and 1099–OIDfor further
reporting information
7Investment expenses
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3
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ly 28, 2003

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For Reporting Payments on Form 1099–PATR:
Amount
C
odeAmountType
1Patronage dividends
2Nonpatronage distributions
3Per-unit retain allocations
4Federal income tax withheld (backup withholding)
5Redemption of nonqualified notices and retain
allocations
Pass-Through Credits
6For filer’s use for pass-through credits
7Investment credit
8Work opportunity credit
Amount CodesForm 1099–PATR—
Taxable Distributions Received From
Cooperatives
9Patron’s alternative minimum tax (AMT) adjustment
For Reporting Distributions or Earnings from Qualif
iedTuitionPlanonaForm
1099–Q:
Amount
C
odeAmountType
1Grossdistribution
2Earnings
Amount CodesForm 1099–Q—
Qualified Tuition Program Payments
(Under Sections 529 and 530)
3Basis
For Reporting Payments on Form 1099–R
:
Amount
C
odeAmountType
1Grossdistribution
2Taxable amount(See Note 1.)
3Capital gain (included in Amount Code 2)
4Federal income tax withheld
5Employee contributions or insur
ance premiums
6Net unrealized appreciation in employer’s securities
8Other
9Total employee contributions
Amount CodesForm 1099–R—
Distributions From Pensions, Annu
ities,
Retirement or Profit-Sharing Plan
s, IRAs,
Insurance Contracts, etc.
ATraditional IRA/SEP/SIMPLE distribution or Roth
conversion(See Note 2.)
Note 1: If the taxable amount cannot be determined, enter a “1” (one) in position 547 of the “B” Record. Payment
Amount 2 must contain zeroes.
Note 2: For Form 1099–R, report the Roth conversion or total amount distributed from an IRA, SEP, or SIMPLE in
Payment Amount Field A (IRA/SEP/SIMPLE distribution orRoth conversion) of the Payee “B” Record, and generally,
the same amount in Payment Amount Field 1 (Gross Distribution). The IRA/SEP/SIMPLE indicator should be set to
“1” (one) in Field Position 548 of the Payee “B” Record.
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ly 28, 2003
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03-30 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For Reporting Payments on Form 1099–S:
Amount
C
odeAmountType
2Gross proceeds(See Note.)
Amount CodesForm 1099–S— Proceeds
From Real Estate Transactions
5Buyer’s part of real estate tax
Note: Include payments of timber royalties made under a “pay-as-cut” contract, reportable under IRC Section 6050N.
If timber royalties are being reported, enter “TIMBER” in the description field of the “B” Record.
For Reporting Information on Form 5498:
Amount
C
odeAmountType
1IRA contributions (other than amounts in Amount Codes
2, 3, 4, 8, 9, and A)(See Notes 1 and 2.)
2Rollover contributions
3Roth conversion amount
4Recharacterized contributions
5Fair market value of account
6Life insurance cost included in Amount Code 1
8SEP contributions
9SIMPLE contributions
Amount CodesForm 5498—IRA
Contribution Information
ARoth IRA contributions
Note 1: If reporting IRA contributions for a participant in a military operation, see2003 Instructions for Forms
1099–R and 5498.
Note 2: Also include employee contributions to an IRA under a SEP plan but not salary reduction contributions. DO
NOTincludeEMPLOYERcontributions; these are included inAmount Code 8.
For Reporting Information on Form 5498–E
SA:
Amount
C
odeAmountType
1Coverdell ESA contributions
Amount CodesForm 5498–ESA—
Coverdell ESA Contribution Informatio
n
2Rollover contributions
For Reporting Information on 5498–MSA:
Amount
C
odeAmountType
1Employee or self-employed person’s MSA contributions
made in2003and2004for2003
2Total contributions made in2003 (See current 2003
Instructions.)
3Total MSA contributions made in2004for2003
4Rollover contributions(See Note.)
Amount CodesForm 5498–MSA—
Archer MSA or Medicare+Choice MSA
Information
5Fair market value of Archer MSA or M+C MSAaccount
on December 31, 2003
Note: This is the amount of any rollover made to this MSA in2003after a distribution from another MSA. For detailed
information on reporting, see the2003 Instructions for Forms 1099–MSA and 5498–MSA.
20
03-30 I.R.B.
17
5
Ju
ly 28, 2003

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For Reporting Payments on Form W–2G:
Amount
C
odeAmountType
1Gross winnings
2Federal income tax withheld
Amount CodesForm W–2G—Certain
Gambling Winnings
7Winnings from identical wagers
42–47Blank6Enter blanks.
48Original File
Indicator
1Required for original files only.Enter “1” (one) if the information is original data.
Otherwise, enter a blank.
49Replacement
File Indicator
1Required for replacement files only. Enter “1” (one) if this file is to replace a file
that IRS/MCC has informed you in writing can not be processed or the FIRE System
indicated a FILE STATUS of bad. Otherwise, enter a blank.
Note: If selecting the Replacement File Indicator in Position 49, Field Positions 48 and 50 must be blank. Onlyone
indicator may be selected in positions 48, 49, and 50 for each Payer “A” Record.
50Correction File
Indicator
1Required for correction files onlyEnter “1” (one) if this file is to c
orrect
information which was previously submitted to IRS/MCC, was proces
sed, but
contained erroneous information. Any information return which w
as inadvertently
omitted from a file must be submitted as original. Otherwise, ent
er a blank.
51Blank1Enter a blank.
52Foreign Entity
Indicator
1Enter a “1” (one) if the payer is a foreign entity and income is paid by the foreign
entity to a U. S. resident. Otherwise, enter a blank.
53–92First Payer
Name Line
40Required.Enter the name of the payer whose TIN appears in positions 12–20 of the
“A” Record. Any extraneous information must be deleted. Left-justify information,
and fill unused positions with blanks. (Filers should not enter a transfer agent’s
name in this field. Any transfer agent’s name should appear in the Second Payer
Name Line Field.)
93–132Second Payer
Name Line
40If the Transfer (or Paying) Agent Indicator (position 133) contains a “1” (one), this
field must contain the name of the transfer (or paying) agent. If the indicator contains
a “0” (zero), this field may contain either a continuation of the First Payer Name Line
or blanks. Left-justify information and fill unused positions with blanks.
133Transfer Agent
Indicator
1Required.Identifies the entity in the Second Payer Name Line Field.
C
odeMeaning
1The entity in the Second Payer Name Line Field is the
transfer (or paying) agent.
0 (zero)The entity shown isnotthe transfer (or paying) agent
(i.e., the Second Payer Name Line Field contains either
a continuation of the First Payer Name Line Field or
blanks).
134–173Payer Shipping
Address
40Required.If the Transfer Agent Indicator in position 133 is a “1” (one), enter the
shipping address of the transfer (or paying) agent. Otherwise, enter theactual
shipping address of the payer. The street address should include number, street,
apartment or suite number, or PO Box if mail is not delivered to street address.
Left-justify information, and fill unused positions with blanks.
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ly 28, 2003
17
6
20
03-30 I.R.B.

Record Name: Payer “A” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
For U.S. addresses,the payer city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively. Filers must
adhere to the correct format for the payer city, state, and ZIP Code.
For foreign addresses,filers may use the payer city, state, and ZIP Code as a continuous 51-position field. Enter information
in the following order: city, province or state, postal code, and the name of the country. When reporting a foreign address, the
Foreign Entity Indicator in position 52 must contain a “1” (one).
174–213Payer City40Required.If the Transfer Agent Indicator in position 133 is a “1” (one), enter the
city, town, or post office of the transfer agent. Otherwise, enter the city, town, or post
office of the payer. Left-justify information, and fill unused positions with blanks.
Do not enter state and ZIP Code information in this field.
214–215Payer State2Required.Enter the valid U.S. Postal Service state abbreviations. Refer to the chart
of valid state abbreviations in Part A, Sec. 15.
216–224Payer ZIP Code 9Required.Enter the valid nine-digit ZIP Code assigned by the U.S. Postal Service.
If only the first five-digits are known, left-justify information and fill the unused
positions with blanks. For foreign countries, alpha characters are acceptable as long
as the filer has entered a “1” (one) in the Foreign Entity Indicator, located in Field
Position 52 of the “A” Record.
225–239Payer Number &
Extension
15Enter the payer’s phone number and extension. Omit hyphens. Left-justify
information and fill unused positions with blanks.
240–499Blank260Enter blanks.
500–507Record
Sequence
Number
8Required.Enter the number of the record as it appears within your file. The record
sequence number for the “T” record will always be “1” (one), since it is the first
record on your file and you can have only one “T” record in a file. Each record,
thereafter, must be incremented by one in ascending numerical sequence,i.e.,2, 3,
4, etc. Right-justify numbers with leading zeroes in the field. For example, the “T”
record sequence number would appear as “00000001” in the field, the first “A” record
would be “00000002”, the first “B” record, “00000003”, the second “B” record,
“00000004” and so on until you reach the final record of the file, the “F” record.
508–748Blank241Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Sec. 5. Payer “A” Record — Record Layout
Record
Type
Payment
Year
BlankPayer
TIN
Payer Name
Control
Last Filing
Indicator
12–56–1112–2021–2425
Combined
Federal/State
Filer
Type
of
Return
Amount
Codes
BlankOriginal
File
Indicator
Replacement
File
Indicator
Correction
File
Indicator
262728–4142–47484950
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03-30 I.R.B.
17
7
Ju
ly 28, 2003

BlankForeign
Entity
Indicator
First
Payer Name
Line
Second
Payer Name
Line
Transfer
Agent
Indicator
Payer
Shipping
Address
515253–9293–132133134–173
Payer
City
Payer
State
Payer
ZIP
Code
Payer Phone
Number and
Extension
BlankRecord
Sequence
Number
BlankBlank or
CR/LF
174–213214–215216–224225–239240–499500–507508–748749–750
Sec. 6. Payee “B” Record — General Field Descriptions and Record Layouts
.01The “B” Record contains the payment information from the information returns. The record layout for field positions 1 through
543 is the same for all types of returns. Field positions 544 through 750 vary for each type of return to accommodate special fields for
individual forms. In the “B” Record, the filermustallow for allfourteenPayment Amount Fields.For those fields not used, enter
“0s” (zeros).
.02The following specifications include a field in the payee records called “Name Control” in which the first four characters of the
payee’s surname are to be entered by the filer;
(a)If filers are unable to determine the first four characters of the surname, the Name Control Field may be left blank. Com-
pliance with the following will facilitate IRS computer programs in identifying the correct name control:
1.The surname of the payee whose TIN is shown in the “B” Recordshould always appear first. If, however, the records
have been developed using the first name first, the filer must leave a blank space between the first and last names.
2.In the case of multiple payees, only the surname of the payee whose TIN (SSN, EIN, ITIN, or ATIN) is shown in the
“B” Record must be present in the First Payee Name Line. Surnames of any other payees may be entered in the Second
Payee Name Line.
.03For all fields marked“Required”, the transmitter must provide the information described under “Description and Remarks”.
For those fields not marked“Required”, the transmitter must allow for the field, but may be instructed to enter blanks or zeros in the
indicated field position(s) and for the indicated length.
.04All records must be a fixed length of 750 positions.
.05A field is also provided in these specifications for Special DataEntries. This field may be used torecord information required
by state or local governments, or for the personal use of the filer. IRS does not use the data provided in the Special Data Entries Field;
therefore, the IRS program does not check the content or format ofthe data entered in this field. It is the filer’s option to use the
Special Data Entry Field.
.06Following the Special Data Entries Field in the “B” Record, payment fields have been allocated for State Income Tax Withheld
and Local Income Tax Withheld. These fields are for the convenience of the filers. The information will not be used by IRS/MCC.
.07Those payers participating in the Combined Federal/State Filing Program must adhere to all of the specifications in Part A, Sec.
13, to participate in this program.
.08All alpha characters in the “B” Record must be uppercase.
.09 Do notuse decimal points (.) to indicate dollars and cents. Payment Amount Fields must be all numerics.
Record Name: Payee “B” Record
Field
Position
Field TitleLength Description and Remarks
1Record Type1Required.Enter “B”.
2–5Payment Year4Required.Enter “2003” (unless reporting prior year data; report the
year which applies [2001, 2002, etc.]).
6Corrected Return Indicator(See
Note.)
1Required for corrections only.Indicates a corrected return
C
odeDefinition
GIf this is a one-transaction correction or the first of
a two-transaction correction
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ly 28, 2003
17
8
20
03-30 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
CIf this is the second transaction of a two transaction
correction
BlankIf this is not a return being submitted to correct
information already processed by IRS.
Note: C, G, and non-coded records must be reported using separate Payer “A” Records. Refer to Part A, Sec. 11,
for specific instructions on how to file corrected returns.
7–10Name Control4If determinable, enter the first four characters of the surname of t
he
person whose TIN is being reported in positions 12–20 of the “B”
Record; otherwise,enter blanks. This usually is the payee. If th
e
name that corresponds to the TIN is not included in the first or se
c-
ond payee name line and the correct name control is not provided
,a
backup withholding notice may be generated for the record. Sur
-
names of less than four characters should be left-justified,
filling
the unused positions with blanks. Special characters and im
bedded
blanks should be removed. In the case of a business, other th
an a sole
proprietorship, use the first four significant characte
rs of the business
name. Disregard the word “the” when it is the first word of t
he name,
unless there are only two words in the name. A dash (-) and a
nam-
persand (&) are the only acceptable special characters
. Surname pre-
fixes are considered, e.g., for Van Elm, the na
me control would be
VANE.Forasoleproprietorshipusethenameo
f the owner to create
the name control and report the owner’s name
in positions 248–287,
First Payer Name Line.
Note: Imbedded blanks, extraneous words, titles, and special characters (i.e., Mr., Mrs., Dr., period [.], apostrophe
[’]) should be removed from the Payee Name Lines. This information may be dropped during subsequent processing at
IRS/MCC. A dash (-) and an ampersand (&) are the only acceptable special characters.
The following examples may be helpful to filers in developing the Name Control:
N
ame:NameControl
Individuals:
JaneB
rownBROW
John A.L
eeLEE*
James P.E
n,Sr.EN*
JohnO
’NeilONEI
MaryV
anBurenVANB
JuanD
eJesusDEJE
Gloria A.E
l-RoyEL-R
Mr. JohnS
mithSMIT
JoeM
cCarthyMCCA
PedroT
orres-Lopes**TORR
MariaL
opez Moreno**LOPE
Binh ToL
aLA*
Nhat ThiP
hamPHAM
MarkD
’AllesandroDALL
Corporations:
TheF
irstNationalBankFIRS
T
heHideawayTHEH
20
03-30 I.R.B.
17
9
Ju
ly 28, 2003

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
A&BCafeA&BC
1
1THStreet Inc.11TH
Sole Proprietor:
MarkH
emlock
DBA The Sunshine Club
HEML
Partnership:
RobertA
spen
and Bess Willow
ASPE
HaroldF
ir,BruceElm,
and Joyce Spruce et al Ptr
FIR*
Estate:
FrankW
hiteEstateWHIT
Estate of SheilaB
lueBLUE
Trusts and Fiduciaries:
D
aisy Corporation Employee
Benefit Trust
DAIS
Trust FBO TheC
herry-blossom
Society
CHER
Exempt Organizations:
L
aborer’s Union, AFL-CIOLABO
S
t.Bernard’s Methodist
Church Bldg. Fund
STBE
*Name Controls of less than four significant characters must be left-justified and blank-filled.
**For Hispanic names, when two last names are shown for an individual, derive the name control from the first last name.
11TypeofTIN1Thisfieldisusedtoiden
tify the Taxpayer Identification Number
(TIN) in positions 12–2
0 as either an Employer Identification Num-
ber (EIN), a Social Sec
urity Number (SSN), an Individual Taxpayer
Identification Numbe
r (ITIN) or an Adoption Taxpayer Identification
Number (ATIN). Enter
the appropriate code from the following table:
C
odeTypeofTINTypeofAccount
1EINA business, organization, some
sole proprietors, or other entity
2SSNAn individual, including some
sole proprietors
2ITINAn individual required to have a
taxpayer identification number,
but who is not eligible to obtain
an SSN
2ATINAn adopted individual prior to the
assignment of a social security
number
BlankN/AIf the type of TIN is not deter-
minable, enter a blank.
Ju
ly 28, 2003
18
0
20
03-30 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
12–20Payee’s Taxpayer
Identification
Number (TIN)
9Required.Enter the nine-digit Taxpayer Identification Number of
the payee (SSN, ITIN, ATIN, or EIN). If an identification number
has been applied for but not received, enter blanks.Do not enter hy-
phens or alpha characters.All zeros, ones, twos, etc., will have the
effect of an incorrect TIN. If the TIN is not available, enter blanks.
Payers who submit data with missing TINs, and have taken the re-
quired steps to obtain this information, should submit a letter with
their media.
Note: If you are required to report payments made through Foreign Intermediariesand Foreign Flow-Through
Entities on Form 1099, see the2003 General Instructions for Forms 1099, 1098, 5498 and W–2Gfor reporting requirements.
21–40Payer’s Account Number For
Payee
20
Required.Enter any number assigned by the payer to the payee that
can be used by the IRS to distinguish between information returns.
This number must be unique for each information return.If a payee
has more than one reporting of the same document type, it is vital
that each reporting have a unique account number. For example, if
a payer has 3 separate pension distributions for the same payee and
3 separate Forms 1099-R are filed, 3 separate unique account num-
bers are required. A payee’s account number may be given a unique
sequencing number, such as, 01, 02 or A, B, etc. to differentiate each
reported information return.Do not use the payee’s TIN since this
will not make each record unique. This information is critical when
corrections are filed. This number will be provided with the backup
withholding notification and may be helpful in identifying the branch
or subsidiary reporting the transaction. Do not define data in this field
in packed decimal format. If fewer than twenty characters are used,
filers may either left or right-justify, filling the remaining positions
with blanks.
41–44Payer’s Office Code4Enter office code of payer; otherwise, enter blanks. For payers with
multiple locations, this field may be used to identify the location of
the office submitting the information return. This code will also ap-
pear on backup withholding notices.
45–54Blank10Enter blanks
PaymentAmountFields
(Must be numeric)
Required. Filers should allow for all payment amounts. For
those not used, enter zeros.Each payment field must contain 12
numeric characters. Each payment amount must contain U.S. dollars
and cents. The right-most two positions represent cents in the pay-
ment amount fields.Do not enter dollar signs, commas, decimal
points, or negative payments, except those items that reflect a loss
on Form 1099–B or 1099–Q.Positive and negative amounts are in-
dicated by placing a “+” (plus) or “-” (minus) sign in the left-most
position of the payment amount field. A negative over punch in the
unit's position may be used, instead of a minus sign, to indicate a
negative amount. If a plus sign, minus sign, or negative over punch
is not used, the number is assumed to be positive. Negative over
punch cannot be used in PC created files. Payment amounts must be
right-justified and unused positions must be zero-filled.
55–66Payment Amount 1*12The amount reported in this field represents payments for Amount
Code 1 in the “A” Record.
67–78Payment Amount 2*12The amount reported in this field represents payments for Amount
Code 2 in the “A” Record.
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1
Ju
ly 28, 2003

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
79–90Payment Amount 3*12The amount reported in this field represents payments for Amount
Code 3 in the “A” Record.
91–102Payment Amount 4*12The amount reported in this field represents payments for Amount
Code 4 in the “A” Record.
103–114 Payment Amount 5*12The amount reported in this field represents payments for Amount
Code 5 in the “A” Record.
115–126 Payment Amount 6*12The amount reported in this field represents payments for Amount
Code 6 in the “A” Record.
127–138 Payment Amount 7*12The amount reported in this field represents payments for Amount
Code 7 in the “A” Record.
139–150 Payment Amount 8*12The amount reported in this field represents payments for Amount
Code 8 in the “A” Record.
151–162 Payment Amount 9*12The amount reported in this field represents payments for Amount
Code 9 in the “A” Record.
163–174 Payment Amount A*12The amount reported in this field represents payments for Amount
Code A in the “A” Record.
175–186 Payment Amount B*12The amount reported in this field represents payments for Amount
Code B in the “A” Record.
187–198 Payment Amount C*12The amount reported in this field represents payments for Amount
Code C in the “A” Record.
199–210 Payment Amount D*12The amount reported in this field represents payments for Amount
Code D in the “A” Record.
211–222 Payment Amount E*12The amount reported in this field represents payments for Amount
Code E in the “A” Record.
* If there are discrepancies between the payment amount fields and the boxes on the paper forms, the instructions in
this Revenue Procedure govern.
222–246 Reserved25Enter blanks.
247Foreign Country Indicator1If the address of the payee is in a foreign country, enter a “1”
(one) in this field;otherwise, enter blank. When filers use this in-
dicator, they may use a free format for the payee city, state, and ZIP
Code. Enter information in the following order: city, province or
state, postal code, and the name of the country. Address information
must not appear in the First or Second Payee Name Line.
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ly 28, 2003
18
2
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03-30 I.R.B.

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
248–287 First Payee Name Line40Required.Enter the name of the payee (preferably surname first)
whose Taxpayer Identification Number (TIN) was provided in posi-
tions 12–20 of the “B” Record. Left-justify and fill unused positions
with blanks. If more space is required for the name, use the Second
PayeeNameLineField.Thenamesofanyotherpayeesmaybeen-
tered in the Second Payee Name Line Field. If reporting information
for a sole proprietor, the individual’s name must always be present on
the First Payee Name Line. The use of the business name is optional
intheSecondPayeeNameLineField. EndtheFirstPayeeName
Line with a full word. Use appropriate spacing. Extraneous words,
titles, and special characters (i.e., Mr., Mrs., Dr., period, apostrophe)
should be removed from the Payee Name Lines. This information
may be dropped during subsequent processing at IRS/MCC. A dash
(-) and an ampersand (&) are the only acceptable special characters
for First and Second Payee Name Lines.
Note: If you are required to report payments made through Foreign Intermediariesand Foreign Flow-Through
Entities on Form 1099, see the2003 General Instructions for Forms 1099, 1098, 5498 and W–2Gfor reporting requirements.
288–327 Second Payee Name Line40If there are multiple payees (e.g., partners, joint owners, or spouses),
use this field for those names not associated with the TIN provided in
positions 12–20 of the “B” Record, or if not enough space was pro-
vided in the First Payee Name Line, continue the name in this field.
Do not enter address information.It is important that filers provide
as much payee information to IRS/MCC as possible to identify the
payee associated with the TIN. Left-justify and fill unused positions
with blanks.See Note above in First Payee Name Line.
328–367 Blank40Enter blanks.
368–407 Payee Mailing Address40Required.Enter mailing address of payee. Street address should
include number, street, apartment or suite number, or PO Box if mail
is not delivered to street address. Left-justify information and fill
unused positions with blanks. This fieldmust notcontain any data
other than the payee’s mailing address.
408–447 Blank40Enter blanks.
448–487 Payee City40Required.Enter the city, town or po
st office. Left-justify informa-
tion and fill the unused positions
with blanks. Enter APO or FPO if
applicable. Do not enter state and
ZIP Code information in this field.
488–489 Payee State2Required.Enter the valid U.S. Postal Service state abbreviations for
states or the appropriate postal identifier (AA, AE, or AP) described
in Part A, Sec. 15.
490–498 Payee ZIP Code9Required.Enter the valid ZIP Code (nine or five-digit) assigned
by the U.S. Postal Service. If only the first five-digits are known,
left-justify information and fill the unused positions with blanks. For
foreign countries, alpha characters are acceptable as long as the filer
has entered a “1” (one) in the Foreign Country Indicator, located in
position 247 of the “B” Record.
499Blank1Enter blank.
20
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18
3
Ju
ly 28, 2003

Record Name: Payee “B” Record (Continued)
Field
Position
Field TitleLength Description and Remarks
500–507 Record Sequence Number8Required.Enter the number of the record as it appears within your
file. The record sequence number for the “T” record will always be
“1” (one), since it is the first record on your file and you can have only
one “T” record in a file. Each record, thereafter, must be incremented
by one in ascending numerical sequence, i.e., 2, 3, 4 etc. Right-justify
numbers with leading zeroes in the field. For example, the “T” record
sequence number would appear as “00000001” in the field, the first
“A” record would be “00000002”, the first “B” record, “00000003”,
the second “B” record, “00000004” and so on until you reach the
final record of the file, the “F” record.
508–543 Blank36Enter blanks.
Standard Payee “B” Record Format For
All Types of Returns, Positions 1–543
Record
Type
Payment
Year
Corrected
Return
Indicator
Name
Control
Type of
TIN
Payee’s
TIN
Payer’s
Account
Number
For Payee
12–567–101112–2021–40
Payer’s
Office
Code
BlankPayment
Amount
1
Payment
Amount
2
Payment
Amount
3
Payment
Amount
4
Payment
Amount
5
41–4445–5455–6667–7879–9091–102103–114
Payment
Amount
6
Payment
Amount
7
Payment
Amount
8
Payment
Amount
9
Payment
Amount A
Payment
Amount B
115–126127–138139–150151–162163–174175–186
Payment
Amount
C
Payment
Amount
D
Payment
Amount
E
ReservedForeign
Country
Indicator
First Payee
Name Line
Second Payee
Name Line
Blank
187–198199–210211–222223–246247248–287288–327328–367
Payee
Mailing
Address
BlankPayee
City
Payee
State
Payee
ZIP
Code
BlankRecord
Sequence
Number
Blank
368–407408–447448–487488–489490–498499500–507508–543
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ly 28, 2003
18
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03-30 I.R.B.

The following sections define the field positions for the different types of returns in the Payee “B” Record (positions 544–750):
(1) Form 1098
(2) Form 1098–E
(3) Form 1098–T
(4) Form 1099–A
(5) Form 1099–B
(6) Form 1099–C
(7)Form 1099–CAP
(8) Form 1099–DIV*
(9) Form 1099–G*
(10)Form 1099–H
(11) Form 1099–INT*
(12) Form 1099–LTC
(13) Form 1099–MISC*
(14) Form 1099–MSA
(15) Form 1099–OID*
(16) Form 1099–PATR*
(17) Form 1099–Q
(18) Form 1099–R*
(19) Form 1099–S
(20) Form 5498*
(21)Form 5498–ESA
(22) Form 5498–MSA
(23) Form W–2G
* These forms may be filed through the Combined Federal/State Filing Program. IRS/MCC will forward these records to participating
states for filers who have been approved for the program. See Part A, Sec. 13, for information about the program, including specific
codes for the record layouts.
(1) Payee “B” Record — Record Layout Positions 544–750 for Form 1098
Field
Position
Field TitleLengthDescription and Remarks
544–662Blank119Enter blanks.
663–722Special Data
Entries
60This portion of the “B” Record may be used to record informa-
tion for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue depart-
ments for filing requirements. If this field is not utilized, enter
blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
20
03-30 I.R.B.
18
5
Ju
ly 28, 2003

Payee “B” Record — Record Layout Positions 544–750
for Forms 1098
BlankSpecial
Data
Entries
BlankBlank
or CR/LF
544–662663–722723–748749–750
(2) Payee “B” Record — Record Layout Positions 544–750 for Form 1098–E
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Origination
Fees/Capitalized
Interest Indicator
1Enter “1” (one) if the amount reported in Payment Amount
Field 1 includes loan origination fees and/or capitalized interest.
Otherwise, enter a blank.
548–662Blank115Enter blanks.
663–722Special Data
Entries
60This portion of the “B” Record may be used to record
information for state or local government reporting or for the
filer’s own purposes. Payers should contact the state or local
revenue departments for the filing requirements. If this field is
not utilized, enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Forms 1098–E
BlankOrigination
Fees/
Capitalized
Interest
Indicator
BlankSpecial
Data
Entries
BlankBlank or CR/LF
544–546547548–662663–722723–748749–750
(3) Payee “B” Record — Record Layout Positions 544–750 for Form 1098–T
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Half-time Student
Indicator
1Enter “1” (one) if the student was at least a half-time student dur-
ing any academic period that began in 2003. Otherwise, enter a
blank.
548Graduate Student
Indicator
1Enter “1” (one) if the student is enrolled exclusively in a graduate
level program. Otherwise, enter a blank.
Ju
ly 28, 2003
18
6
20
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(3) Payee “B” Record — Record Layout Positions 544–750 for Form 1098–T (Continued)
Field
Position
Field TitleLengthDescription and Remarks
549Academic Period
Indicator
1Enter “1” (one) if the amount reported in Payment Amount Field
1 or Payment Amount Field 2 includes amounts for an academic
period beginning January through March 2004. Otherwise, enter
ablank.
550–662Blank113Enter blanks.
663–722Special Data
Entries
60This portion of the “B” Record may be used to record informa-
tion for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue depart-
ments for the filing requirements. If this field is not utilized, enter
blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1098–T
BlankHalf-time
Student
Indicator
Graduate
Student
Indicator
Academic
Period
Indicator
BlankSpecial
Data
Entries
BlankBlank or
CR/LF
544–546547548549550–662663–722723–748749–750
(4) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–A
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Personal Liability
Indicator
1Enter the appropriate indicator from the table below:
I
ndicatorUsage
1Borrower was personally liable for repay-
ment of the debt.
BlankBorrower was not personally liable for repay-
ment of the debt.
548–555Date of Lender’s
Acquisition or
Knowledge of
Abandonment
8Enter the acquisition date of the secured property or the date the
lender first knew or had reason to know the property was aban-
doned, in the format YYYYMMDD (e.g., January 5, 2003, would
be 20030105).Do not enter hyphens or slashes.
20
03-30 I.R.B.
18
7
Ju
ly 28, 2003

(4) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–A (Continued)
Field
Position
Field TitleLengthDescription and Remarks
556–594Description of Property39Enter a brief description of the property. For real property, enter the
address, or, if the address does not sufficiently identify the prop-
erty, enter the section, lot and block. For personal property, enter
the type, make and model (e.g., Car-1999 Buick Regal or Office
Equipment). Enter “CCC” for crops forfeited on Commodity Credit
Corporation loans. If fewer than 39 positions are required, left-jus-
tify information and fill unused positions with blanks.
595–662Blank68Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for the filing requirements. If this field is not utilized, enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–A
BlankPersonal Liability
Indicator
Date of Lender’s
Acquisition or
Knowledge of
Abandonment
Description
of
Property
Blank
544–546547548–555556–594595–662
Special
Data
Entries
BlankBlank or
CR/LF
663–722723–748749–750
(5) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–B
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
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ly 28, 2003
18
8
20
03-30 I.R.B.

(5) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–B (Continued)
Field
Position
Field TitleLengthDescription and Remarks
547Gross Proceeds Indicator1Enter the appropriateindicator from the following table, to identify
the amount reported in Amount Code 2; otherwise, enter a blank.
I
ndicatorUsage
1Gross proceeds
2Gross proceeds less commissions and options
premiums
548–555Date of Sale8For broker transactions, enter the trade date of the transaction.
For barter exchanges, enter the date when cash, property, a
credit, or scrip is actually or constructively received in the format
YYYYMMDD (e.g., January 5, 2003, would be 20030105). Enter
blanks if this is an aggregate transaction.Do not enter hyphens
or slashes.
556–568CUSIP Number13For broker transactions only, enter the CUSIP (Committee on
Uniform Security Identification Procedures) number of the item
reported for Amount Code 2 (stocks, bonds, etc.). Enter blanks if
this is an aggregate transaction. Enter “0s” (zeros) if the number is
not available. Right-justify information and fill unused positions
with blanks.
569–607Description39If fewer than 39 characters are required, left-justify information
and fill unused positions with blanks. For broker transactions,
enter a brief description of the disposition item (e.g., 100 shares
of XYZ Corp). For regulated futures and forward contracts, enter
“RFC” or other appropriate description. For bartering transactions,
show the services or property provided.
608–662Blank55Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers.
This information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Blank2Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
20
03-30 I.R.B.
18
9
Ju
ly 28, 2003

Payee “B” Record — Record Layout Positions 544–750
for Form 1099–B
Second
TIN Notice
(Optional)
BlankGross
Proceeds
Indicator
Date of
Sale
CUSIP
Number
Description
544545–546547548–555556–568569–607
BlankSpecial
Data
Entries
State
Income
Tax
Witheld
Local
Income
Tax
Withheld
BlankBlank
or
CR/LF
608–662663–722723–734735–746747–748749–750
(6) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–C
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Bankruptcy Indicator1Enter “1” (one) to indicate the debt was discharged in bankruptcy,
if known. Otherwise, enter a blank.
548–555Date Canceled8Enter the date the debt was canceled in the format of
YYYYMMDD (e.g., January 5, 2003, would be 20030105).Do
not enter hyphens or slashes.
556–594Debt Description39Enter a description of the origin of the debt, such as student loan,
mortgage, or credit card expenditure. If a combined Form 1099–C
and 1099–A is being filed, also enter a description of the property.
595–662Blank68Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Forms 1099–C
BlankBankruptcy
Indicator
Date
Canceled
Debt
Description
BlankSpecial
Data
Entries
544–546547548–555556–594595–662663–722
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ly 28, 2003
19
0
20
03-30 I.R.B.

BlankBlank
or CR/LF
723–748749–750
(7) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–CAP
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
547Gross Proceeds Indicator1Enter the appropriate ind
icator from the following table, to identify
the amount reported in Am
ount Code 2; otherwise, enter a blank.
I
ndicator
Usage
1Gross proceeds
2Gross proceeds less commissions and
options premiums
548–555Date of Exchange8Enter the date the stock was exchanged for cash, stock in the
successor corporation, or other property received in the format
YYYYMMDD (e.g., January 5, 2003, would be 20030105).Do
not enter hyphens or slashes.
556–568CUSIP Number13For broker transactions only, enter the CUSIP (Committee on
Uniform Security Identification Procedures) number of the
item reported. Enter blanks if this is an aggregate transaction.
Enter “0s” (zeros) if the number is not available. Right-justify
information and fill unused positions with blanks.
569–607Description39If filed by a broker, enter the corporation’s name and Employer
Identification Number (EIN). If fewer than 39 characters are
required, left-justify information and fill unused positions with
blanks.
608–615Number of Shares
Exchanged
8Enter the number of shares of the corporation’s stock which
were exchanged in the transaction. Report whole number only.
Right-justify information and fill unused positions with blanks.
616–625Class of Stock10Enter the class of stock that was exchanged. Left-justify the
information and fill unused positions with blanks.
626Filed By Broker Indicator1Enter a “1” (one) if the transaction was filed by a Broker.
Otherwise, enter a blank.
627Shareholder Indicator1Enter a“1” (one) if the shareholder cannot take a loss on their tax
return. Otherwise, enter a blank.
628–662Blank35Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
20
03-30 I.R.B.
19
1
Ju
ly 28, 2003

(7) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–CAP (C
ontinued)
Field
Position
Field TitleLengthDescription and Remarks
723–748Blank26Enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–CAP
Second
TIN Notice
BlankGross
Proceeds
Indicator
Date of
Exchange
CUSIP
Number
DescriptionNumber of
Shares
Exchanged
544545–546547548–555556–568569–607608–615
Class of
Stock
Filed By
Broker
Indicator
Shareholder
Indicator
BlankSpecial Data
Entries
BlankBlank or
CR/LF
616–625626627628–662663–722723–748749–750
(8) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–DIV
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
547–586Foreign Country or U.S.
Possession
40Enter the name of the foreign country or U.S. possession to which
the withheld foreign tax (Amount Code A) applies. Otherwise,
enter blanks.
587–662Blank76Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
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ly 28, 2003
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2
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(8) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–DIV (Continued)
Field
Position
Field TitleLengthDescription and Remarks
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–DIV
Second
TIN
Notice
(Optional)
BlankForeign
Country
or U.S.
Possession
BlankSpecial
Data Entries
544545–546547–586587–662663–722
State
Income
Tax
Withheld
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
723–734735–746747–748749–750
(9) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–G
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Trade or Business
Indicator
1Enter “1” (one) to indicate the state or local income tax refund,
credit, or offset (Amount Code 2) is attributable to income tax that
applies exclusively to income from a trade or business.
I
ndicatorUsage
1Income tax refund applies exclusively to a
trade or business.
BlankIncome tax refund is a general tax refund.
548–551Tax Year of Refund4Enter the tax year for which the refund, credit, or Offset (Amount
Code 2) was issued.The tax year must reflect the tax year for
which the payment was made, not the tax year of the Form
1099–G. The tax year must be in the four-position format of
YYYY (e.g., 2001).The valid range of years for the refund is
1992 through 2002.
20
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19
3
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ly 28, 2003

(9) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–G (Continued)
Field
Position
Field TitleLengthDescription and Remarks
Note: This data is not considered prior year data since itis required to be reported in the current tax year. Do NOT
enter “P” in field position 6 of the Transmitter “T” Record.
552–662Blank111Enter blanks.
633–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. You may enter your routing
and transit number (RTN) here. If this field is not utilized, enter
blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filer
s. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must
be
zero-filled. If not reporting local tax withheld, this f
ield may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–G
BlankTrade or Business
Indicator
Tax Year
of
Refund
BlankSpecial
Data
Entries
State
Income
Tax
Withheld
544–546547548–551552–662663–722723–734
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
735–746747–748749–750
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ly 28, 2003
19
4
20
03-30 I.R.B.

(10) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–H
Field
Position
Field TitleLengthDescription and Remarks
544–546 Blank3Enter blanks.
547–548 Number of Months Eligible2
Required.Enter the total number of months you are
eligible for health insurance advance payments. Left-
justify and blank fill any remaining positions.
549–662 Blank114Enter blanks.
663–722 Special Data Entries60This portion of the “B” Record may be used to record in-
formation for state or local government reporting or for
the filer’s own purposes. Payers should contact the state
or local revenue departments for filing requirements. If
this field is not utilized, enter blanks.
723–748 Blank26Enter blanks.
749–750 Blank2Enter blanks or carriage return/line feed (CR/LF) char-
acters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–H
BlankNumber of
Months
Eligible
BlankSpecial
Data
Entries
BlankBlank or
CR/LF
544–546547–548549–662663–722723–746749–750
(11) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–INT
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
547–586Foreign Country or U.S.
Possession
40Enter the name of the foreign country or U.S. possession to which
the withheld foreign tax (Amount Code 6) applies. Otherwise,
enter blanks.
587–662Blank76Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. You may enter your routing
and transit number (RTN) here. If this field is not utilized, enter
blanks.
20
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19
5
Ju
ly 28, 2003

(11) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–INT (Continued)
Field
Position
Field TitleLengthDescription and Remarks
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–INT
Second
TIN
Notice
(Optional)
BlankForeign
Country
or U.S.
Possession
BlankSpecial
Data
Entries
State
Income
Tax
Withheld
544545–546547–586587–662663–722723–734
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
735–746747–748749–750
(12) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–LTC
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Type of Payment
Indicator
1Enter the appropriate indicator from the following table; otherwise,
enter blanks.
I
ndicatorUsage
1Per diem
2Reimbursed amount
548–556Social Security Number
of Insured
9Required.Enter the Social Security Number of the insured.
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ly 28, 2003
19
6
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03-30 I.R.B.

(12) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–LTC (Continued)
Field
Position
Field TitleLengthDescription and Remarks
557–596Name of Insured40Required.Enter the name of the insured.
597–636Address of Insured40Required.Enter the address of the insured. Street address should
include number, street, apartment or suite number (or PO Box if
mail is not delivered to street address). Left-justify information
and fill unused positions with blanks. This fieldmust notcontain
any data other than payee’s address.
For U.S. addresses,the payee city, state, and ZIP Code must be reported as a 40, 2, and 9-position field, respectively.Filers
must adhere to the correct format for the insured’s city, state, and ZIP Code.
For foreign addresses,filers may use the insured’s city, state, and ZIP Code as a continuous 51-position field. Enter information
in the following order: city, province or state, postal code, and the name of the country. When reporting a foreign address, the
Foreign Country Indicator in position 247 must contain a “1” (one).
637–676City of Insured40Required.Enter the city, town, or post office. Left-justify
information and fill the unused positions with blanks. Enter APO
or FPO, if applicable. Do not enter state and ZIP Code information
in this field.
677–678State of Insured2Required.Enter the valid U.S. Postal Service state abbreviations
for states or the appropriate postal identifier (AA, AE, or AP)
described in Part A, Sec. 15.
679–687ZIP Code of Insured9Required.Enter the valid nine-digit ZIP Code assigned by
the U.S. Postal Service. If only the first five-digits are known,
left-justify information and fill the unused positions with blanks.
For foreign countries, alpha characters are acceptable as long as
the filer has entered a “1” (one) in the Foreign Country Indicator,
located in position 247 of the “B” Record.
688Status of Illness Indicator
(Optional)
1Enter the appropriate code from the table below to indicate the
status of the illness of the insured; otherwise, enter blank:
I
ndicatorUsage
1Chronically ill
2Terminally ill
689–696Date Certified (Optional)8Enter the latest date of a doctor’s certification of the status of the
insured’s illness. The format of the date is YYYYMMDD (e.g.,
January 5, 2003, would be 20030105).Do not enter hyphens
or slashes.
697Qualified Contract
Indicator (Optional)
1Enter a “1” (one) if benefits were from a qualified long-term care
insurance contract; otherwise, enter blank.
698–722Blank25Enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers.
This information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled.
20
03-30 I.R.B.
19
7
Ju
ly 28, 2003

(12) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–LTC (Continued)
Field
Position
Field TitleLengthDescription and Remarks
747–748Blank2Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–LTC
BlankType of
Payment
Indicator
SSN of
Insured
Name of
Insured
Address
of
Insured
City of
Insured
State of
Insured
ZIP Code
of
Insured
544–546547548–556557–596597–636637–676677–678679–687
Status of
Illness
Indicator
(Optional)
Date
Certified
(Optional)
Qualified
Contract
Indicator
(Optional)
BlankState
Income
Tax
Withheld
Local
Income
Tax
Withheld
688689–696697698–722723–734735–746
BlankBlank
or
CR/LF
747–748749–750
(13) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–MISC
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
547Direct Sales Indicator
(See Note.)
1
Enter a “1” (one) to indicate sales of $5,000 or more of consumer
products to a person on a buy-sell, deposit-commission, or any
other commission basis for resale anywhere other than in a
permanent retail establishment. Otherwise, enter a blank.
Note: If reporting a direct sales indicator only, use Type of Return “A” in Field Position 27, and Amount Code 1 in
Field Position 28 of the Payer “A” Record. All payment amount fields in the Payee “B” Record will contain zeros.
548–662Blank115Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not used, enter
blanks.
Ju
ly 28, 2003
19
8
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03-30 I.R.B.

(13) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–MISC (Continued)
Field
Position
Field TitleLengthDescription and Remarks
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–MISC
Second
TIN
Notice
(Optional)
BlankDirect
Sales
Indicator
BlankSpecial
Data
Entries
State
Income
Tax
Withheld
Local
Income
Tax
Withheld
544545–546547548–662663–722723–734735–746
Combined
Federal/
State
Code
Blank
or CR/LF
747–748749–750
(14) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–MSA
Field
Position
Field TitleLengthDescription and Remarks
544Blank1Enter blank.
545Distribution Code1Required.Enter the applicable code to indicate the type of
payment:
C
odeCategory
1Normal distribution
2Excess contribution
3Disability
20
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19
9
Ju
ly 28, 2003

(14) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–MSA (Continued)
Field
Position
Field TitleLengthDescription and Remarks
4Death distribution other than code 6 (This includes
distributions to a spouse, nonspouse, or estate
beneficiary in the year of death and to an estate after the
year of death.)
5Prohibited transaction
6Death distributionafteryearofdeathto a nonspouse
beneficiary (Do not use for distribution to an estate.)
546Blank1Enter a blank.
547Medicare+Choice MSA
Indicator
1Enter “1” (one) if distributions are from a Medicare+Choice MSA.
Otherwise, enter a blank.
548–662Blank115Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Blank2Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–MSA
BlankDistribution
Code
BlankMedicare+
Choice MSA
Indicator
BlankSpecial Data
Entries
544545546547548–662663–722
State
Income Tax
Withheld
Local Income
Tax
Withheld
BlankBlank
or
CR/LF
723–734735–746747–748749–750
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ly 28, 2003
20
0
20
03-30 I.R.B.

(15) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–OID
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–546Blank2Enter blanks.
547–585Description39Required.Enter the CUSIP number, if any. If there is no CUSIP
number, enter the abbreviation for the stock exchange and issuer,
the coupon rate, and year (must be 4-digit year)ofmaturity(e.g.,
NYSE XYZ 12/2003). Show the name of the issuer if other than
the payer. If fewer than 39 characters are required, left-justify
information and fill unused positions with blanks.
586–662Blank77Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table l. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
20
03-30 I.R.B.
20
1
Ju
ly 28, 2003

Payee “B” Record — Record Layout Positions 544–750
for Form 1099–OID
Second
TIN
Notice
(Optional)
BlankDescriptionBlankSpecial
Data
Entries
State
Income
Tax
Withheld
544545–546547–585586–662663–722723–734
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
735–746747–748749–750
(16) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–PATR
Field
Position
Field TitleLengthDescription and Remarks
544Second TIN Notice
(Optional)
1Enter “2” (two) to indicate notification by IRS twice within three
calendar years that the payee provided an incorrect name and/or
TIN combination; otherwise, enter a blank.
545–662Blank118Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks, or carriage return/line feed (CR/LF) characters.
Ju
ly 28, 2003
20
2
20
03-30 I.R.B.

Payee “B” Record — Record Layout Positions 544–750
for Form 1099–PATR
Second
TIN
Notice
(Optional)
BlankSpecial
Data
Entries
State
Income Tax
Withheld
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
544545–662663–722723–734735–746747–748749–750
(17) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–Q
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Trustee to Trustee
Rollover Indicator
1Required.Enter a “1” (one) if reporting a trustee to trustee
rollover, otherwise, enter blank.
548Type of Tuition Payment1Required.Enter the appropriate code from the table below to
indicate the type of tuition payment, otherwise, leave blank.
I
ndicatorUsage
1PrivatePayment
2State Payment
3Coverdell ESA contribution
549Designated Beneficiary1Required.Enter a “1” (one) if the recipient is not the designated
beneficiary otherwise, enter a blank.
550–662Blank113Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own
purposes. Payers should contact the state or local revenue
departments for filing requirements. If this field is not utilized,
enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–Q
BlankTrustee to
Trustee
Rollover
Indicator
Type of
Tuition
Payment
Designated
Beneficiary
BlankSpecial
Data
Entries
BlankBlank
or
CR/LF
544–546547548549550–662663–722723–748749–750
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ly 28, 2003

(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–R
Field
Position
Field TitleLengthDescription and Remarks
544Blank1Enter blank.
545–546Distribution Code
(For a detailed
explanation of
distribution codes, see
the2003 Instructions
for Forms 1099–R and
5498.)
See chart at the end of
this record layout
for a diagram of
valid combinations
of Distribution Codes.
2Required.Enter at least one distribution code from the table below.
More than one code may apply. If only one code is necessary, it must
be entered in position 545 and position 546 will be blank. When us-
ing Code P for an IRA distribution under section 408(d)(4) of the
Internal Revenue Code, the filer may also enter Code 1, 2, or 4, if
applicable. Only three numeric combinations are acceptable, Codes
8 and 1, 8 and 2, and 8 and 4, on one return. These three combina-
tions can be used only if both codes apply to the distribution being
reported. If more than one numeric code is applicable to different
parts of a distribution, report two separate “B” Records.
Distribution Codes 5, 6, 9, E, F, N, R, and S cannot be used with any
other codes. Distribution Code G may be used with Distribution
Code4onlyifapplicable.
C
odeCategory
1*Early distribution, no known exception (in most
cases, under age 59
1
/2)
2*Early distribution, exception applies (Under age
59
1
/2)
3*Disability
4*Death
5*Prohibited transaction
6Section 1035 exchange (a tax-free exchange of life
insurance, annuity, or endowment contracts)
7*Normaldistribution
8*Excess contributions plus earnings/excess deferrals
(and/or earnings) taxable in2003
9Cost of current life insurance protection (premiums
paid by a trustee or custodian for current insurance
protection)
AMay be eligible for 10-year tax option
D*Excess contributions plus earnings/excess deferrals
taxable in2001
EExcess annual additions under section 415/certain
excess amounts under section 403(b) plans
FCharitable gift annuity
GDirect rollover
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ly 28, 2003
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(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–R (Continued)
Field
Position
Field TitleLengthDescription and Remarks
JEarly distribution from a Roth IRA, no known
exception.(ThiscodemaybeusedwithCode8,orP.)
LLoans treated as deemed distributions under section
72(p)
NRecharacterized IRA contribution made for2003
P*Excess contributions plus earnings/excess deferrals
taxable in2002
QEarly distribution from aRoth IRA, known exception.
(Distribution from Roth IRAs when recipient is not
59
1
/2, and the 5 year holding period for qualified
distributions has not been met but exception under
72(q), (t), or (v) applies.)
RRecharacterized IRA contribution made for2002(See
Note.)
S*Early distribution from a SIMPLE IRA in first 2
years, no known exception
TRoth IRA distribution, exception applies if participant
dies or is disabled. (This code may be used with Code
5, 8, or P.)
*If reporting a traditional IRA, SEP, or SIMPLE distribution or a Roth conversion, use the IRA/SEP/SIMPLE Indicator
of “1” (one) in position 548 of the Payee “B” Record.
Note: The trustee of the first IRA must report the recharacterization as a distribution on Form 1099-R (and the
original contribution and its character on Form 5498).
547Taxable Amount Not
Determined Indicator
1Enter “1” (one) only if the taxable amount of the payment entered
for Payment Amount Field 1 (Gross distribution) of the “B” Record
cannot be computed; otherwise, enter blank. (If Taxable Amount
Not Determined Indicator is used, enter “0’s” [zeros] in Payment
Amount Field 2 of the Payee “B” Record.) Please make every effort
to compute the taxable amount.
548IRA/SEP/SIMPLE
Indicator
1Enter “1” (one) for a traditional IRA, SEP, or SIMPLE distribution
or Roth conversion; otherwise, enter a blank.(See Note.)If the
IRA/SEP/SIMPLE Indicator is used, enter the amount of the Roth
conversion or distribution in Payment Amount Field A of the Payee
“B” Record.Do not use the indicator for a distribution from a
Roth or Coverdell ESA or for an IRA recharacterization.
Note: For Form 1099-R, generally, report the Roth conversion or total amount distributed from a traditional IRA,
SEP, or SIMPLE in Payment Amount Field A (traditional IRA/SEP/SIMPLE distribution or Roth conversion), as well as
Payment Amount Field 1 (Gross Distribution) of the “B” Record. Refer to the2003 Instructions for Forms 1099–R and
5498for exceptions (Box 2a instructions).
549Total Distribution
Indicator(See Note.)
1Enter a “1” (one) only if the payment shown for Distribution Amount
Code 1 is a total distribution that closed out the account; otherwise,
enter a blank.
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Ju
ly 28, 2003

(18) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–R (Continued)
Field
Position
Field TitleLengthDescription and Remarks
Note: A total distribution is one or more distributions within one tax year in whi
ch the entire balance of the account is
distributed. Any distribution that does not meet this definition is not a total
distribution.
550–551Percentage of Total
Distribution
2Use this field when reporting a total distribution to more than one
person, such as when a participant is deceased and a payer dis-
tributes to two or more beneficiaries. Therefore, if the percentage
is 100, leave this field blank. If the percentage is a fraction, round
off to the nearest whole number (for example, 10.4 percent will be
10 percent; 10.5 percent will be 11 percent). Enter the percentage
received by the person whose TIN is included in positions 12–20 of
the “B” Record. This field must be right-justified, and unused posi-
tions must be zero-filled. If not applicable, enter blanks. Filers are
not required to enter this information for any IRA distribution or for
direct rollovers.
552–662Blank111Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. The state/payer’s state number, state distribution, name of
locality, and/or local distribution can be entered in this field. Pay-
ers should contact the state or local revenue departments for filing
requirements. If this field is not utilized, enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a s
tate agency as part of
the Combined Federal/State Filing Progr
am, enter the valid state
code from Part A, Sec. 13, Table 1. Fo
r those payers or states not
participating in this program, en
ter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
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ly 28, 2003
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03-30 I.R.B.

Payee “B” Record — Record Layout Positions 544–750
for Form 1099–R
BlankDistribution
Code
Taxable
Amount Not
Determined
Indicator
IRA/SEP/
SIMPLE
Indicator
Total
Distribution
Indicator
Percentage
of Total
Distribution
544545–546547548549550–551
BlankSpecial
Data
Entries
State
Income
Tax
Withheld
Local
Income
Tax
Withheld
Combined
Federal/
State
Code
Blank
or CR/LF
552–662663–722723–734735–746747–748749–750
20
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20
7
Ju
ly 28, 2003

(19) Payee “B” Record — Record Layout Positions 544–750 for Form 1099–S
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Property or Services
Indicator
1Required.Enter “1” (one) if the transferor received or will receive
property (other than cash and consideration treated as cash in com-
puting gross proceeds) or services as part of the consideration for
the property transferred. Otherwise, enter a blank.
548–555Date of Closing8Required.Enter the closing date in the format YYYYMMDD (e.g.,
January 5, 2003, would be 20030105).Do not enter hyphens or
slashes.
556–594Address or Legal
Description
39Required.Enter the address of the property transferred (including
city, state, and ZIP Code). If the address does not sufficiently iden-
tify the property, also enter a legal description, such as section, lot,
and block. For timber royalties, enter “TIMBER.” If fewer than 39
positions are required, left-justify information and fill unused posi-
tions with blanks.
595–662Blank68Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for filing requirements. If this field is not utilized, enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Blank2Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 1099–S
BlankProperty
or Services
Indicator
Date of
Closing
Address
or Legal
Description
BlankSpecial
Data
Entries
544–546547548–555556–594595–662663–722
State
Income Tax
Withheld
Local Income
Tax
Withheld
BlankBlank
or CR/LF
723–734735–746747–748749–750
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ly 28, 2003
20
8
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03-30 I.R.B.

(20) Payee “B” Record — Record Layout Positions 544–750 for Form 5498
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547IRAIndicator
(Individual
Retirement
Account)
1Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code5)foranIRA.
Otherwise, enter a blank.
548SEPIndicator
(SimplifiedEmployee
Pension)
1Required, if applicable.Enter“1”(one)ifreportingrollover
(AmountCode2)orFairMarketValue(AmountCode5)foraSEP.
Otherwise, enter a blank.
549SIMPLE Indicator
(SavingsIncentive
MatchPlan for
Employees)
1Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code5)fora
SIMPLE. Otherwise, enter a blank.
550Roth IRA
Indicator
1Required, if applicable.Enter “1” (one) if reporting a rollover
(Amount Code 2) or Fair Market Value (Amount Code5)foraRoth
IRA. Otherwise, enter a blank.
551RMD Indicator1
Required.Enter “1” (one) if reporting RMD for 2004.
552–662Blank111Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for filing requirements. If this field is not utilized, enter blanks.
723–746Blank24Enter blanks.
747–748Combined Federal/State
Code
2If this payee record is to be forwarded to a state agency as part of
the Combined Federal/State Filing Program, enter the valid state
code from Part A, Sec. 13, Table 1. For those payers or states not
participating in this program, enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters
.
Payee “B” Record — Record Layout Positions 544–750
for Form 5498
BlankIRA
Indicator
SEP
Indicator
SIMPLE
Indicator
Roth
IRA
Indicator
RMD
Indicator
544–546547548549550551
BlankSpecial
Data
Entries
BlankCombined
Federal/
State
Code
Blank
or CR/LF
552–662663–722723–746747–748749–750
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20
9
Ju
ly 28, 2003

(21) Payee “B” Record — Record Layout Positions 544–750 for Form 5498–ESA
Field
Position
Field TitleLengthDescription and Remarks
544–662Blank119Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for filing requirements. If this field is not utilized, enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 5498–ESA
BlankSpecial
Data
Entries
BlankBlank
or CR/LF
544–662663–722723–748749–750
(22) Payee “B” Record — Record Layout Positions 544–750 for Form 5498–MSA
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Medicare+
Choice MSA
Indicator
1Enter “1” (one) for Medicare+Choice MSA.
548–662Blank115Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for filing requirements. If this field is not utilized, enter blanks.
723–748Blank26Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form 5498–MSA
BlankMedicare +
Choice MSA
Indicator
BlankSpecial Data
Entries
BlankBlank or
CR/LF
544–546547548–662663–722723–748749–750
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ly 28, 2003
21
0
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03-30 I.R.B.

(23) Payee “B” Record — Record Layout Positions 544–750 for Form W–2G
Field
Position
Field TitleLengthDescription and Remarks
544–546Blank3Enter blanks.
547Type of Wager Code1Required.Enter the applicable type of wager code from the table
below:
C
odeCategory
1Horse race track (or off-track betting of a horse track
nature)
2Dog race track (or off-track betting of a dog track
nature)
3Jai-alai
4State-conducted lottery
5Keno
6Bingo
7Slot machines
8Any other type of gambling winnings
548–555Date Won8Required.Enter the date of the winning transaction in the format
YYYYMMDD (e.g., January 5, 2003 would be 20030105).Do not
enter hyphens or slashes.This is not the date the money was paid,
if paid after the date of the race (or game).
556–570Transaction15Required.For state-conducted lotteries, enter the ticket or other
identifying number. For keno, bingo, and slot machines, enter the
ticket or card number (and color, if applicable), machine serial num-
ber, or any other information that will help identify the winning
transaction. For all others, enter blanks.
571–575Race5If applicable, enter the race (or game) relating to the winning ticket;
otherwise, enter blanks.
576–580Cashier5If applicable, enter the initials or number of the cashier making the
winning payment; otherwise, enter blanks.
581–585Window5If applicable, enter the window number or location of the person
paying the winning payment; otherwise, enter blanks.
586–600First ID15For other than state lotteries, enter the first identification number of
the person receiving the winning payment; otherwise, enter blanks.
601–615Second ID15For other than state lotteries, enter the second identification number
of the person receiving the winnings; otherwise, enter blanks.
616–662Blank47Enter blanks.
663–722Special Data Entries60This portion of the “B” Record may be used to record information
for state or local government reporting or for the filer’s own pur-
poses. Payers should contact the state or local revenue departments
for filing requirements. If this field is not utilized, enter blanks.
723–734State Income Tax
Withheld
12State income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting state tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
20
03-30 I.R.B.
21
1
Ju
ly 28, 2003

(23) Payee “B” Record — Record Layout Positions 544–750 for Form W–2G (Continued)
Field
Position
Field TitleLengthDescription and Remarks
735–746Local Income Tax
Withheld
12Local income tax withheld is for the convenience of the filers. This
information does not need to be reported to IRS. The payment
amount must be right-justified and unused positions must be
zero-filled. If not reporting local tax withheld, this field may be
used as a continuation of the Special Data Entries Field.
747–748Blank2Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Payee “B” Record — Record Layout Positions 544–750
for Form W–2G
BlankType of
Wager Code
Date
Won
TransactionRaceCashierWindowFirst ID
544–546547548–555556–570571–575576–580581–585586–600
Second IDBlankSpecial
Data
Entries
State
Income
Tax
Withheld
Local
Income
Tax
Withheld
BlankBlank
or CR/LF
601–615616–662663–722723–734735–746747–748749–750
Sec. 7. End of Payer “C” Record — General Field Descriptions and Record Layout
.01The “C” Record consists of the total number of payees and the totals of the payment amount fields filed for each payer and/or
particular type of return. The “C” Record must follow the last “B” Record for each type of return for each payer.
.02For each “A” Record and group of “B” Records on the file, there must be a corresponding “C” Record.
.03The End of Payer “C” Record is a fixed length of 750 positions. The control fields are each 18 positions in length.
Record Name: End of Payer “C” Record
Field
Position
Field TitleLengthDescription and Remarks
1Record Type1Required.Enter “C”
2–9Number of Payees8Required.Enter the total number of “B” Records covered by the
preceding “A” Record. Right-justify information and fill unused
positions with zeros.
10–15Blank6Enter blanks.
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ly 28, 2003
21
2
20
03-30 I.R.B.

Record Name: End of Payer “C” Record (Continued)
Field
Position
Field TitleLengthDescription and Remarks
16–33Control Total 118
34–51Control Total 218
52–69Control Total 318
70–87Control Total 418
88–105Control Total 518
106–123Control Total 618
124–141Control Total 718
142–159Control Total 818
160–177Control Total 918
178–195Control Total A18
196–213Control Total B18
214–231Control Total C18
232–249Control Total D18
250–267Control Total E18
Required.Accumulate totals of any payment amount fields in
the “B” Records into the appropriate control total fields of the
“C” Record.Control totals must be right-justified and unused
control total fields zero-filled.All control total fields are 18
positions in length. Each payment amount must contain U.S.
dollars and cents. The right-most two positions represent cents in
the payment amount fields.
268–499Blank232Enter blanks.
500–507Record Sequence
Number
8Required.Enter the number of the record as it appears within your
file. The record sequence number for the “T” record will always be
“1” (one), since it is the first record on your file and you can have
only one “T” record in a file. Each record, thereafter, must be in-
cremented by one in ascending numerical sequence, i.e., 2, 3, 4, etc.
Right-justify numbers with leading zeroes in the field. For exam-
ple, the “T” record sequence number would appear as “00000001”
in the field, the first “A” record would be “00000002”, the first “B”
record, “00000003”, the second “B” record, “00000004” and so on
until you reach the final recordof the file, the “F” record.
508–748Blank241Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
End of Payer “C” Record — Record Layout
Record
Type
Number
of
Payees
BlankControl
Total
1
Control
Total
2
Control
Total
3
Control
Total
4
Control
Total
5
Control
Total
6
12–910–1516–3334–5152–6970–8788–105106–123
Control
Total
7
Control
Total
8
Control
Total
9
Control
Total
A
Control
Total
B
Control
Total
C
Control
Total
D
Control
Total
E
Blank
124–141142–159160–177178–195196–213214–231232–249250–267268–499
20
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21
3
Ju
ly 28, 2003

Record
Sequence
Number
BlankBlank
or CR/LF
500–507508–748749–750
Sec. 8. State Totals “K” Record — General Field Descriptions and Record Layout
.01The State Totals “K” Record is a summary for a given payer and a given state in the Combined Federal/State Filing Program,
usedonlywhen state reporting approval has been granted.
.02The “K” Record will contain the total number of payees and the total of the payment amount fields filed by a given payer for
a given state. The “K” Record(s) must be written after the “C” Record for the related “A” Record. A file format diagram is located
at the end of Part D.
.03The “K” Record is a fixed length of 750 positions. The control total fields are each 18 positions in length.
.04In developing the “K” Record, for example, if a payer used Amount Codes 1, 3, and 6 in the “A” Record, the totals from the
“B” Records coded for this state would appear in Control Totals 1, 3, and 6 of the “K” Record.
.05There must be a separate “K” Record foreach statebeing reported.
.06Refer to Part A, Sec. 13, for the requirements and conditions thatmustbe met to file via this program.
State Totals “K” Record — Record Layout Forms 1099–DIV, 1099–G, 1099–INT, 1099–MISC,
1099–OID, 1099–PATR, 1099–R, and 5498
Field
Position
Field TitleLengthDescription and Remarks
1Record Type1Required.Enter “K”.
2–9Number of Payees8Required.Enter the total number of “B” Records being coded for
this state. Right-justify information and fill unused positions with
zeros.
10–15Blank6Enter blanks.
16–33Control Total 118
34–51Control Total 218
52–69Control Total 318
70–87Control Total 418
88–105Control Total 518
106–123Control Total 618
124–141Control Total 718
142–159Control Total 818
160–177Control Total 918
178–195Control Total A18
196–213Control Total B18
214–231Control Total C18
232–249Control Total D18
250–267Control Total E18
Required.Accumulate totals of any payment amount fields in
the “B” Records for each state being reported into the appropriate
control total fields of the appropriate “K” Record. Each payment
amount must contain U.S. dollars and cents. The right-most two
positions represent cents in the payment amount field.Control
totals must be right-justified and unused control total fields
zero-filled.All control total fields are 18 positions in length.
268–499Blank232Enter blanks.
Ju
ly 28, 2003
21
4
20
03-30 I.R.B.

State Totals “K” Record — Record Layout Forms 1099–DIV, 1099–G, 1099–INT, 1099–MISC,
1099–OID, 1099–PATR, 1099–R, and 5498 (Continued)
Field
Position
Field TitleLengthDescription and Remarks
500–507Record Sequence
Number
8Required.Enter the number of the record as it appears within your
file. The record sequence number for the “T” record will always be
“1” (one), since it is the first record on your file and you may have
only one “T” record in the file. Each record, thereafter, must be in-
cremented by one in ascending numerical sequence, i.e., 2, 3, 4, etc.
Right-justify numbers with leading zeroes in the field. For exam-
ple, the “T” record sequence number would appear as “00000001”
in the field, the first “A” record would be “00000002”, the first “B”
record, “00000003”, the second “B” record, “00000004” and so on
until you reach the final recordof the file, the “F” record.
508–706Blank199Enter blanks.
707–724State Income Tax
Withheld Total
18State income tax withheld total is for the convenience of the filers.
Aggregate totals of the state income tax withheld field in the Payee
“B” Records; otherwise, enter blanks.
725–742Local Income Tax
Withheld Total
18Local income tax withheld total is for the convenience of the filers.
Aggregate totals of the local income tax withheld field in the Payee
“B” Records; otherwise, enter blanks.
743–746Blank4Enter blanks.
747–748Combined Federal/State
Code
2Required.Enter the code assigned to the state which is to receive
the information. (Refer to Part A, Sec. 13, Table l.)
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
State Totals “K” Record — Record Layout Forms 1099–DIV, 1099–G, 1099–INT, 1099–MISC,
1099–OID, 1099–PATR, 1099–R, and 5498
Record
Type
Number
of
Payees
BlankControl
Total
1
Control
Total
2
Control
Total
3
Control
Total
4
Control
Total
5
Control
Total
6
12–910–1516–3334–5152–6970–8788–105106–123
Control
Total
7
Control
Total
8
Control
Total
9
Control
Total
A
Control
Total
B
Control
Total
C
Control
Total
D
Control
Total
E
Blank
124–141142–159160–177178–195196–213214–231232–249250–267268–499
Record
Sequence
Number
BlankState
Income
Tax Withheld
Total
Local
Income
Tax Withheld
Total
BlankCombined
Federal/
State
Code
Blank or
CR/LF
500–507508–706707–724725–742743–746747–748749–750
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Sec. 9. End of Transmission “F” Record — General Field Descriptions and Record Layout
.01The End of Transmission “F” Record is a summary of the number of payers in the entire file.
.02The “F” Record is a fixed record length of 750 positions.
.03This record must be written after the last “C” Record (or last “K” Record, when applicable) of the entire file.
Record Name: End of Transmission “F” Record
Field
Position
Field TitleLengthDescription and Remarks
1Record Type1Required.Enter “F”.
2–9Number of “A” Records8Enter the total number of Payer “A” Records in the entire file (right-
justify and zero-fill) or enter all zeros.
10–30Zero21Enter zeros.
31–49Blank19Enter blanks.
50–57Total Number of payees8Enter the total number of Payee “B” Records reported in the file.
Right-justify information and fill unused positions with zeros. If
you have entered this total in the “T” Record, you may leave this
field blank.
58–499Blank442Enter blanks.
500–507Record Sequence
Number
8Required.Enter the number of the record as it appears within your
file. The record sequence number for the “T” record will always be
“1” (one), since it is the first record on your file and you can only
have one “T” record in a file. Each record, thereafter, must be in-
cremented by one in ascending numerical sequence, i.e., 2, 3, 4, etc.
Right-justify numbers with leading zeroes in the field. For exam-
ple, the “T” record sequence number would appear as “00000001”
in the field, the first “A” record would be “00000002”, the first “B”
record, “00000003”, the second “B” record, “00000004” and so on
until you reach the final recordof the file, the “F” record.
508–748Blank241Enter blanks.
749–750Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
End of Transmission “F” Record — Record Layout
Record
Type
Number
of
“A”
Records
ZeroBlankTotal
Number
of
Payees
BlankRecord
Sequence
Number
BlankBlank or
CR/LF
12–910–3031–4950–5758–499500–507508–748749–750
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Sec. 10. File Layout Diagram
PART E. EXTENSIONS OF TIME AND WAIVERS
Sec. 1. General — Extensions
.01An extension of time to file may be requested for Forms 1098, 1099, 5498, 5498–MSA, 5498–ESA, W–2G, W–2 series, 8027
and 1042–S.
.02Form 8809, Request for Extension of Time To File Information Returns, should be submitted to IRS/MCC at the address listed in
.08 of this section. This form may be used to request an extension of time to file information returns submitted on paper, electronically
or magnetically to the IRS. Use a separate Form 8809 for each method of filing information returns you intend to use,i.e., electronically
and/or magnetically.
.03To be considered, an extension request must be postmarked or transmitted by the due date of the returns; otherwise, the request
will be denied. (See Part A, Sec. 9, for due dates.) If requesting an extension of time to file several types of forms, use one Form
8809; however, Form 8809 or file must be postmarked no later than the earliest due date. For example, if requesting an extension of
time to file both Forms 1099–INT and 5498, submit Form 8809 on or before March 1, 2004. (See Note.)
Note: For Tax Year 2003, if you will be filing Forms 1098, 1099, 8027, W–2G, or W–2electronically, Form 8809 is not
required unless an extension is needed beyond March 31, 2004.
.04 As soon as it is apparentthat a 30-day extension of time to file is needed, an extension request should be submitted. It will take
a minimum of 30 days for IRS/MCC to respond to an extension request. Generally, IRS/MCC does not begin processing extension
requests until January. Extension requests received prior to January are input on a first come, first serve basis.
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.05Under certain circumstances, a request for an extension of time may be denied. When a denial letter is received, any additional
or necessary information may be resubmitted within 20 days.
.06Requesting an extension of time for multiple payers (50 or less) may be done by submitting Form 8809 and attaching a list of
the payer names and associated TINs (EIN or SSN).The listing must be attached to ensure an extension is recorded for all payers.
Form 8809 may be computer-generated or photocopied. Be sure to usethe most recently updated version and include all the pertinent
information.
.07Requests for an extension of time to file for more than 50 payers arerequiredto be submitted electronically or magnetically.
IRS encourages requests for 10 to 50 payers to be filed electronically or magnetically. (See Sec. 3, for the record layout.) The request
may be filed electronically, on tape cartridges, and 3
1
/2-inch diskettes.
.08All requests for an extension of time filed on Form 8809 or magnetic media should be sent using the following address:
IRS—Martinsburg Computing Cente
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 Extension of Time
(EOT) requests, it is imperative that the attention line be present on all envelopes or packages containing Form 8809.
.09Requests 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 IRS/MCC after the due date, are treated as timely under the “timely mailing as timely filing”
rule. A similar rule applies to designated private delivery services (PDSs). See Part A, Sec.9, for more information on PDSs. For
requests delivered by a designated PDS, but through a non-designated service, the actual date of receipt by IRS/MCC will be used as
the filing date.
.10Transmitters requesting an extension of time for multiple payers will receive one approval letter, accompanied by a list of payers
covered under that approval.
.11If an additional extension of time is needed, a second Form 8809 or file must be filed by the initial extended due date. Check
line 7 on the form to indicate that an additional extension is being requested. A second 30-day extension will be approved only in
cases of extreme hardship or catastrophic event.If requesting a second 30-day extension of time, submit the information return
files as soon as prepared. Do not wait for MCC’s response to your second extension request.
.12If an extension request is approved, the approval letter should be kept on file.DO NOTsendtheapprovalletterorcopyofthe
approval letter to IRS/MCC with the magnetic media file or to the service center where the paper returns are filed.
.13Request an extension for only one tax year.
.14A signature is not required when requesting a 30 day extension. If a second 30 day extension is requested, the Form 8809
MUSTbe signed.
.15Failure to properly complete and sign Form 8809 may cause delays in processing the request or result in a denial. Carefully
read and follow the instructions on the back of Form 8809.
.16Form 8809 may be obtained by calling1–800-TAX–FORM (1–800–829–3676). The form is also available on theIRS Website
at www.irs.gov.A copy of Form 8809 is also provided in the back of Publication 1220.
Sec. 2. Specifications for Electronic Filing or Magnetic Media Extensions of Time
.01The specifications in Sec. 3 include the required 200-byte record layout for extensions of time to file requests submitted elec-
tronically or magnetically. Also included are the instructions for the information that is to be entered in the record.Filers are advised
to read this section in its entirety to ensure proper filing.
.02If a filer does not have an IRS/MCC assigned Transmitter Control Code (TCC), Form 4419, Application for Filing Information
Returns Electronically/Magnetically,mustbe submitted to obtain a TCC. This numbermustbe used to submit an extension request
electronically/magnetically. (See Part A, Sec. 6.)
.03For extension requests filed on magnetic media, the transmitter must mail the completed, signed Form 8809, Request for Exten-
sion of Time To File Information Returns, in the same package as the corresponding media or fax it to 304–264–5602. For extension
requests filed electronically, the transmitter must fax Form 8809 the same day the transmission is made.
.04 Transmitters submitting an extension of time electronically or magnetically should not submit a list of payer names and
TINs with Form 8809 since this information is included on the electronic or magnetic file. However, Line 6 of Form 8809 must
be completed with the total number of records included on the electronic file or magnetic media.
.05Do not submit tax year 2003 extension requests filed on magnetic media beforeJanuary 1, 2004, or electronically before
January 6, 2004.
.06Each piece of magnetic mediamusthave an external media label containing the following information:
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(a)Transmitter name
(b)Transmitter Control Code (TCC)
(c)Tax year
(d)The words “Extension of Time”
(e)Record count
.07Electronic Filing, Tape Cartridge, and 3
1
/2-inch Diskette specifications for extensions are the same as the specifications for
filing of information returns. (See Part B, or C for specific technical information.)
Sec. 3. Record Layout — Extension of Time
.01Positions 6 through 188 of the following record should contain information about thepayerfor whom the extension of time to
file is being requested. Do not enter transmitter information in these fields.Only one TCC may be present in a file.
Record Layout for Extension of Time
Field
Position
Field TitleLength Description and Remarks
1–5Transmitter Control Code5Required.Enter the five-digit Transmitter Control Code (TCC)
issued by IRS.Only one TCC per file is acceptable.
6–14Payer TIN9Required.Must be the valid nine-digit EIN/SSN assigned to the
payer.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; however, the Foreign Entity Indicator, position
187,mustbe set to “X.”
15–54Payer Name40Required.Enter the name of the payer whose TIN appears in
positions 6–14. Left-justify information and fill unused positions
with blanks.
55–94Second Payer Name40If additional space is needed, this field may be used to continue
name line information (e.g., c/o First National Bank); otherwise,
enter blanks.
95–134Payer Address40Required.Enter the payer’s address. Street address should in-
clude number, street, apartment or suite number (or PO Box if
mail is not delivered to a street address).
135–174 Payer City40Required.Enter payer city, town, or post office.
175–176 Payer State2Required.Enter the payer valid U.S. Postal Service state abbre-
viation. (Refer to Part A, Sec. 15.)
177–185 Payer ZIP Code9Required.Enter payer ZIP Code. If using a five-digit ZIP Code,
left-justify information and fill unused positions with blanks.
186Document Indicator(See Note.)1Required.Enter the appropriate document code that indicates
the form for which you are requesting an extension of time.
CodeDocument
1W–2
21098, 1098–E, 1098–T, 1099–A,
1099–B, 1099–C, 1099–CAP,
1099–DIV, 1099–G, 1099–H,
1099–INT, 1099–LTC, 1099–MISC,
1099–MSA, 1099–OID, 1099–PATR,
1099–Q, 1099–R, 1099–S, or W–2G
35498
41042–S
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Record Layout for Extension of Time (Continued)
Field
Position
Field TitleLength Description and Remarks
5REMIC Documents (1099–INT or
1099–OID)
95498–MSA
105498–ESA
Note: Do not enter any other values in this field. Submit a separate record for each document. For example, if you are
requesting an extension for Form 1099–INT and Form 5498 for the same payer, submit one record with “2” coded in this
field and another record with “3” coded in this field. If you are requesting an extension for Form 1099–DIV and Form
1099–MISC for the same payer, submit one record with “2” coded in this field.
187Foreign Entity Indicator1Enter “X” if the payer is a foreign entity.
188Recipient Request Indicator1Enter “X” if the extension request is to furnish statements to the
recipients of the information return.
189–198 Blank10Enter blanks.
199–200 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Extension of Time Record Lay
out
Transmitter
Control Code
Payer
TIN
Payer
Name
Second
Payer Name
Payer AddressPayer CityPayer State
1–56–1415–5455–9495–134135–174175–176
Payer
ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Recipient
Requests
Indicator
BlankBlank
or CR/LF
177–185186187188189–198199–200
Sec. 4. Extension of Time for Recipient Copies of Information Returns
.01Request anextension of time to furnish the statements to recipientsof Forms 1098, 1099, 5498, W–2G, W–2 series, and
1042–S by submitting a letter to IRS/MCC at the address listed in Part E, Sec 1.08. The letter should contain the following information:
(a)Payer name
(b)TIN
(c)Address
(d)Type of Return
(e)Specify that the extension request is to provide statements to recipients
(f)Reason for delay
(g)Signature of payer or duly authorized person
.02Requests for an extension of time to furnish statements to recipients of Forms 1098, 1099, 5498, W–2G, W–2 series, and
1042–S are not automatically approved; however, if approved, generally an extension will allow a maximum of 30 additional days
from the due date. The request must be postmarked by the date on which the statements are due to the recipients.
.03Generally, only the payer may sign the letter requesting the extension for recipient copies. A transmitter must have a contractual
agreement with the filers to submit extension requests on their behalf. This should be stated in your letter of request for recipient copy
extensions. If you are requesting an extension for multiple payers electronically or magnetically, you must use the format specifications
in Sec. 4 (See Sec.1 .07). The Transmitter Control Code (TCC) is not required for recipient requests.
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Sec. 5. Form 8508, Request for Waiver From Filing Information Returns on Magnetic Media
.01If a payer is required to file on magnetic media but fails to do so (or fails to file electronically in lieu of magnetic media filing)
and does not have an approved waiver on record, the payer will be subject to a penalty of $50 per return in excess of 250. (For penalty
information, refer to the Penalty Section of the2003 General Instructions for Forms 1099, 1098, 5498, and W–2G.)
.02If payers are required to file original or corrected returns on magnetic media, but such filing would create an undue 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. Form 8508 can be obtained on the IRS Website atw
ww.irs.govor by calling toll-free
1–800–829–3676.
.03Even though a payer may submit as many as 249 corrections on paper, IRS encourages electronic or magnetic filing of correc-
tions. Once the 250 threshold has been met, filers are required to submit any returns of 250 or more electronically or magnetically.
However, if a waiver for original documents is approved, any corrections for the same type of returns will be covered under this waiver.
.04Generally, only the payer may sign Form 8508. A transmitter may sign if given power of attorney; however, a letter signed by
the payer stating this fact must be attached to Form 8508.
.05A transmitter must submit a separate Form 8508 for each payer. Do not submit a list of payers.
.06All information requested on Form 8508 must be provided to IRS for the request to be processed.
.07The waiver, if approved, will provide exemption from the magnetic media filing requirement for the current tax year only.
Payers may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is necessary.
.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. Generally, IRS/MCC
does not process waiver requests until January. Waiver requests received prior to January are processed on a first come, first serve
basis.
.10All requests for a waiver should be sent using the following address:
IRS—Martinsburg Computing Cente
Information Reporting Program
240 Murall Drive
Kearneysville, WV 25430
.11 File Form 8508 for the W–2 series of forms with IRS/MCC, not SSA.
.12Waivers are evaluated on a case-by-case basis and are approvedor 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.
.13If a waiver request is approved, keep the approval letter on file.DO NOTsend a copy of the approved waiver to the service
center where the paper returns are filed.
.14An approved waiver only applies to the requirement for filing information returns electronically/magnetically. The payer must
still timely file information returns on the official IRS paper forms or an acceptable substitute form with the appropriate service center.
20
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ly 28, 2003

Part IV. Items of General Interest
Section 29 — Test Procedures
and Significant Chemical Change
Announcement 2003–46
Section 29 of the Internal Revenue
Code provides a tax credit for the pro-
duction and sale of solid synthetic fuels
produced from coal. In Rev. Proc.
2001–30, 2001–1 C.B. 1163, the Internal
Revenue Service provided that taxpayers
need to satisfy certain conditions in order
to obtain a letter ruling that a solid fuel
(other than coke) produced from coal is
a qualified fuel under § 29(c)(1)(C). Rev.
Proc. 2001–30, as modified by Rev. Proc.
2001–34, 2001–1 C.B. 1293. Consistent
with prior ruling practice, the revenue
procedure requires taxpayers to present
evidence that all, or substantially all,
of
the coal used as feedstock undergoes a
significant chemical change. To meet t
his
requirement and obtain favorable lett
er
rulings, taxpayers have provided represen-
tations, as well as expert reports, asserting
that their processes resulted in a signifi-
cant chemical change.
The Service has had reason to ques-
tion the scientific validity of test proce-
dures and results that have been presented
as evidence that fuel underwent a signifi-
cant chemical change, and is currently re-
viewing information regarding these test
procedures and results. If, upon further in-
quiry, the Service determines that these test
procedures and results do not demonstrate
that a significant chemical change has oc-
curred, the Service will take appropriate
action, including revoking letter rulings r
e-
lying on such procedures and results.
Until the Service’s review is complete,
rulings on the question of significant
chemical change will be suspended for
requests relying on the procedures and
results being reviewed. Taxpayers may
request a letter ruling pre-submission con-
ference to determine if a ruling request
relies on test procedures and results that
are being reviewed.SeeSection 11.07,
Rev. Proc. 2003–1, 2003–1 I.R.B. 1.
During this review period, taxpayers that
previously received letter rulings and
want certainty with respect to test proce-
dures and results used as evidence of a
significant chemical change may request
a Pre-Filing Agreement by following
the procedures set forth in Rev. Proc.
2001–22, 2001–1 C.B. 745.
DRAFTING INFORMATION
The principal author of this announce-
ment is Joseph Makurath of the Office
of Associate Chief Counsel (Passthroughs
and Special Industries). For further infor
-
mation regarding this announcement, con-
tact Mr. Makurath at 202–622–3120 (not
a toll-free call).
Announcement of Disciplinary Actions Involving Attorneys,
Certified Public Accountants, Enrolled Agents, and Enrolled
Actuaries — Suspensions, Censures, Disbarments, and
Resignations
Announcement 2003-50
Un
der Title 31, Code of Federal Regu-
la
tions, Part 10, attorneys, certified public
a
ccountants, enrolled agents, and enrolled
actuaries may not accept assistance from,
or assist, any person who is under disbar-
ment or suspension from practice before
the Internal Revenue Service if the assis-
tance relates to a matter constituting prac-
tice before the Internal Revenue Service
and may not knowingly aid or abet another
pe
rson to practice before the Internal Rev-
en
ue Service during a period of suspen-
s
ion, disbarment, or ineligibility of such
other person.
T
o enable attorneys, certified public
accountants, enrolled agents, and enrolled
actuaries to identify persons to whom
these restrictions apply, the Director, Of-
fice of Professional Responsibility will
announce in the Internal Revenue Bulletin
th
eir names, their city and state, their pro-
fe
ssional designation, the effective date
o
f disciplinary action, and the period of
suspension. This announcement will ap-
pear in the weekly Bulletin at the earliest
practicable date after such action and will
continue to appear in the weekly Bulletins
for five successive weeks.
Suspensions From Practice Before the Internal
Revenue Service After Notice and an Opportunity for a
Proceeding
Under Title 31, Code of Federal Regu-
lations, Part 10, after notice and an oppor-
tunity for a proceeding before an adminis-
trative law judge, the following individuals
have been placed under suspension from
practice before the Internal Revenue Ser-
vice:
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ly 28, 2003
22
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03-30 I.R.B.

NameAddressDesignationEffective Date
Arnold, JohnClovis, CAEnrolled AgentFebruary 13, 2003
to
August 12, 2003
Disbarments From Practice Before the Internal
Revenue Service After Notice and an Opportunity for a
Proceeding
Under Title 31, Code of Federal Regu-
lations, Part 10, after notice and an oppor-
tunity for a proceeding before an adminis-
trative law judge, the following individuals
have been disbarred from practice before
the Internal Revenue Service:
NameAddressDesignationEffective Date
Kalajian, ThomasLaguna Hills, CACPAOctober 2, 2002
Messman, CarlaOuting, MNEnrolled AgentJanuary 9, 2003
Consent Suspensions From Practice Before the Internal
Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, an attorney, certified pub-
lic accountant, enrolled agent, or enrolled
actuary, in order to avoid the institution
or conclusion of a proceeding for his or
her disbarment or suspension from prac-
tice before the Internal Revenue Service,
may offer his or her consent to suspension
from such practice. The Director, Office
of Professional Responsibility, in his dis-
cretion, may suspend an attorney, certified
public accountant, enrolled agent or en-
rolled actuary in accordance with the con-
sent offered.
The following individuals have been
placed under consent suspension from
practice before the Internal Revenue Ser-
vice:
NameAddressDesignationDate of Suspension
Kemp, BartSonoma, CAAttorneyMarch 15, 2003
to
November 15, 2003
Marks, GaryHewlett, NYCPAMarch 24, 2003
to
March 23, 2004
Fehl, KennethPalo Alto, CAAttorneyApril 1, 2003
to
March 31, 2004
Cohen, PeterEdison, NJCPAApril 3, 2003
to
May 2, 2005
Kohn, MichaelSt. Louis, MOAttorneyIndefinite
from
April 30, 2003
20
03-30 I.R.B.
22
3
Ju
ly 28, 2003

NameAddressDesignationDate of Suspension
Sogamoso, CarlosBellflower, CAEnrolled AgentIndefinite
from
May 1, 2003
Huston, JamesKingman, AZCPAMay 1, 2003
to
April 30, 2006
Halleran, EdwardCarle Place, NYEnrolled AgentIndefinite
from
May 1, 2003
Marshall, E. PeterGlens Falls, NYCPAMay 1, 2003
to
April 30, 2006
Bell, RosannaIrvington, NYCPAIndefinite
from
May 8, 2003
Kingsley, StevenWeston, CTCPAIndefinite
from
May 15, 2003
Schawe, RudolphBrenham, TXEnrolled AgentMay 22, 2003
to
October 21, 2004
Scheve, MichaelBaltimore, MDCPAIndefinite
from
May 27, 2003
McKenzie, DawnaFort Smith, AREnrolled AgentIndefinite
from
June 2, 2003
Suen, MingSan Francisco, CAEnrolled AgentIndefinite
from
June 3, 2003
Reyes, RupertoPlacentia, CAEnrolled AgentJune 10, 2003
to
December 9, 2005
Garmo, GeorgisW. Bloomfield, MICPAIndefinite
from
June 10, 2003
Holmes, James L.Burlington, NCEnrolled AgentIndefinite
from
June 18, 2003
Brooks, SandraSan Diego, CAEnrolled AgentIndefinite
from
June 20, 2003
Malley, WayneCupertino, CAEnrolled AgentIndefinite
from
June 27, 2003
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ly 28, 2003
22
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NameAddressDesignationDate of Suspension
Leininger, BarbaraLutz, FLEnrolled AgentIndefinite
from
June 27, 2003
Expedited Suspensions From Practice Before the
Internal Revenue Service
Under Title 31, Code of Federal Regu-
lations, Part 10, the Director, Office of Pro-
fessional Responsibility, is authorized to
immediately suspend from practice before
the Internal Revenue Service any practi-
tioner who, within five years from the date
the expedited proceeding is instituted (1)
has had a license to practice as an attorney,
certified public accountant, or actuary sus-
pended or revoked for cause or (2) has been
convicted of certain crimes.
The following individuals have been
placed under suspension from practice
before the Internal Revenue Service by
virtue of the expedited proceeding provi-
sions:
NameAddressDesignationDate of Suspension
Radwick, PeterWoodinville, WACPAIndefinite
from
March 10, 2003
Jellinger, RichardAnoka, MNAttorneyIndefinite
from
March 10, 2003
Deen, BillyMansfield, TXCPAIndefinite
from
March 10, 2003
Dougherty Jr, WilliamNewport News, VAAttorneyIndefinite
from
March 10, 2003
Abood, NormanOregon, OHAttorneyIndefinite
from
March 10, 2003
Matis, VendelRedlands, CAAttorneyIndefinite
from
March 31, 2003
Workman, AndrewPanama City, FLCPAIndefinite
from
March 31, 2003
Bagwell, Jr., NoelCunningham, TNAttorneyIndefinite
from
March 31, 2003
O’Brien, BrienSioux City, IAAttorneyIndefinite
from
March 31, 2003
Boykoff, FranklinPleasantville, NYAttorneyIndefinite
from
March 31, 2003
20
03-30 I.R.B.
22
5
Ju
ly 28, 2003

NameAddressDesignationDate of Suspension
McKinnon, MarvaStatesville, NCAttorneyIndefinite
from
March 31, 2003
Bailey, Scott K.Eden Prairie, MNAttorneyIndefinite
from
March 31, 2003
Kim, KunAtlanta, GACPAIndefinite
from
March 31, 2003
Massari III, DomenicTampa, FLAttorneyIndefinite
from
May 12, 2003
Haugabrook II, TyroneValdosta, GAAttorneyIndefinite
from
May 19, 2003
Wester, JosephMontgomery, ALCPAIndefinite
from
May 19, 2003
Smercina, DavidSolon, OHCPAIndefinite
from
May 19, 2003
Pullings, RetnaWashington, DCAttorneyIndefinite
from
May 19, 2003
Boyd, JamesMendota Heights, MNAttorneyIndefinite
from
May 20, 2003
Spindler, JudithOmaha, NEAttorneyIndefinite
from
May 20, 2003
Wintroub, EdwardOmaha, NEAttorneyIndefinite
from
May 20, 2003
Brinker, PeterOmaha, NEAttorneyIndefinite
from
May 21, 2003
Valdes, AlfredoOld Greenwich, CTCPAIndefinite
from
May 21, 2003
Cruise, MichaelLincoln, NEAttorneyIndefinite
from
May 22, 2003
Schoppert, ThomasMinot, NDAttorneyIndefinite
from
June 2, 2003
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ly 28, 2003
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03-30 I.R.B.

NameAddressDesignationDate of Suspension
White, PaulSmithfield, NCEnrolled AgentIndefinite
from
June 2, 2003
Brier, MichaelProvidence, RICPAIndefinite
from
June 16, 2003
Resignations of Enrolled Agents
Under Title 31, Code of Federal Regu-
lations, Part 10, an enrolled agent, in or-
der to avoid the institution or conclusion
of a proceeding for his or her disbarment
or suspension from practice before the In-
ternal Revenue Service, may offer his or
her resignation as an enrolled agent. The
Director, Office of Professional Responsi-
bility, in his discretion, may accept the of-
fered resignation.
The Director, Office of Professional
Responsibility, has accepted offers of
resignation as an enrolled agent from the
following individuals:
NameAddressDate of Designation
Evans, CarolineTiverton, RIMay 7, 2003
Censure Issued by Consent
Under Title 31, Code of Federal Reg-
ulations, Part 10, in lieu of a proceeding
being instituted or continued, an attorney,
certified public accountant, enrolled agent,
or enrolled actuary, may offer his or her
consent to the issuance of a censure. Cen-
sure is a public reprimand.
The following individuals have con-
sented to the issuance of a Censure:
NameAddressDesignationDate of Censure
Pargas, Carlos B.Miami, FLCPAMarch 19, 2003
Malkasian, GarySacramento, CACPAMarch 27, 2003
Wilcox, Ronald E.Mt. Carmel, ILCPAApril 29, 2003
Wood, David T.Shawneetown, ILCPAMay 27, 2003
20
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22
7
Ju
ly 28, 2003

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the ef-
fect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is be-
ing extended to apply to a variation of the
fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that the
same principle also applies to B, the earlier
ruling is amplified. (Compare withmodi-
fied,below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confusion.
It is not used where a position in a prior
ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis 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 applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes 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 rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than re-
state the substance and situation of a previ-
ously published ruling (or rulings). Thus,
the term is used to republish under the
1986 Code and regulations the same po-
sition published under the 1939 Code and
regulations. The term is also used when
it is desired to republish in a single rul-
ing a series of situations, names, etc., that
were previously published over a period of
time in separate rulings. If the new rul-
ing does more than restate the substance
of a prior ruling, a combination of terms
is used. For example,modifiedandsu-
persededdescribes a situation where the
substance of a previously published 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 pub-
lished ruling is first modified and then, as
modified, is superseded.
Supplementedis 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 rul-
ing has been supplemented several times, a
new ruling may be published that includes
the list in the original ruling and the ad-
ditions, and supersedes all prior rulings in
the series.
Suspendedis used in rare situations
to show that the previous published rul-
ings 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 formerly 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.—Statement 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.
Ju
ly 28, 2003
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Numerical Finding List
1
Bulletin 2003–27 through 2003–29
Announcements:
2003-45, 2003-28 I.R.B.73
2003-47, 2003-29 I.R.B.124
2003-48, 2003-28 I.R.B.73
Notices:
2003-38, 2003-27 I.R.B.9
2003-39, 2003-27 I.R.B.10
2003-40, 2003-27 I.R.B.10
2003-41, 2003-28 I.R.B.49
2003-42, 2003-28 I.R.B.49
2003-43, 2003-28 I.R.B.50
2003-44, 2003-28 I.R.B.52
2003-45, 2003-29 I.R.B.86
2003-46, 2003-28 I.R.B.53
Proposed Regulations:
REG-106736-00, 2003-28 I.R.B.60
REG-107618-02, 2003-27 I.R.B.13
REG-122917-02, 2003-27 I.R.B.15
Revenue Procedures:
2003-45, 2003-27 I.R.B.11
2003-46, 2003-28 I.R.B.54
2003-47, 2003-28 I.R.B.55
2003-48, 2003-29 I.R.B.86
2003-49, 2003-29 I.R.B.89
2003-50, 2003-29 I.R.B.119
2003-51, 2003-29 I.R.B.121
Revenue Rulings:
2003-70, 2003-27 I.R.B.3
2003-71, 2003-27 I.R.B.1
2003-73, 2003-28 I.R.B.44
2003-74, 2003-29 I.R.B.77
2003-75, 2003-29 I.R.B.79
2003-77, 2003-29 I.R.B.75
2003-78, 2003-29 I.R.B.76
2003-79, 2003-29 I.R.B.80
2003-80, 2003-29 I.R.B.83
2003-87, 2003-29 I.R.B.82
Treasury Decisions:
9061, 2003-27 I.R.B.5
9062, 2003-28 I.R.B.46
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2003-1 through 2003-26 is in Internal Revenue Bulletin 2003-27,
dated July 7, 2003.
20
03-30 I.R.B.
iiJu
ly 28, 2003

Findings List of Current Actions on
Previously Published Items
1
Bulletin 2003–27 through 2003–29
Notices:
89-79
Modified and superseded by
Rev. Proc. 2003-47, 2003-28 I.R.B.55
2001–70
Ampilfied by
Notice 2003-45, 2003-29 I.R.B.86
2001–74
Ampilfied by
Notice 2003-45, 2003-29 I.R.B.86
Proposed Regulations:
EE-86-88 (LR-279-81)
Withdrawn by
REG-122917-02, 2003-27 I.R.B.15
Revenue Procedures:
77-12
Amplified, modified, and superseded by
Rev. Proc. 2003-51, 2003-29 I.R.B.121
96-30
Modified and amplified by
Rev. Proc. 2003-48, 2003-29 I.R.B.86
2002-9
Modified by
Rev. Proc. 2003-45, 2003-27 I.R.B.11
Amplified and modified by
Rev. Proc. 2003-50, 2003-29 I.R.B.119
2002-33
Amplified and modified by
Rev. Proc. 2003-50, 2003-29 I.R.B.119
2003-3
Modified by
Rev. Proc. 2003-48, 2003-29 I.R.B.86
2003-15
Modified and superseded by
Rev. Proc. 2003-49, 2003-29 I.R.B.89
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2003-1 through 2003-26 is in Internal Revenue Bulletin 2003-27, dated July 7, 2003.
Ju
ly 28 , 2 0 0 3
ii
i
20
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*U.S.GovernmentPrintingOffice:2 003—4 96–9 19/60093