Internal Revenue Bulletin 2004-45 (PDF rendition): IRS Revenue Procedures

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

Bulletin No. 200
4-45
November 8, 2004
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.
INCOME TAX
Rev. Rul. 2004–102, page 784.
Federal rates; adjusted federal rates; adjusted federal
long-termrateandthelong-termexemptrate.For pur-
poses of sections 382, 642, 1274, 1288, and other sections
of the Code, tables set forth the rates for November 2004.
Rev. Rul. 2
004–103, page 783.
Modificat
ion of Rev. Rul. 95–63.Rev. Rul. 95–63, with
respect to
countries described in section 901(j)(2)(A) of the
Code, is mo
dified by providing that Iraq ceased to be described
in that se
ction on June 27, 2004. Rev. Rul. 95–63 modified.
T.D. 9160, page 785.
Final regulations under section 6050P(c)(2)(D) of the Code pro-
vide guidance on the information reporting requirements for
discharges of indebtedness by organizations that have a sig-
nificant trade or business of lending money. These regulations
provide that the lending of money is a significant trade or busi-
ness if money is loaned on a regular and continuing basis.
Notice 2004–71, page 793.
Section 1(h)(11) of the Code provides that certain dividends
paid to an individual shareholder from either a domestic cor-
poration or a “qualified foreign corporation” are subject to tax
at the reduced rates applicable to certain capital gains. This
notice provides guidance for persons required to make returns
and provide statements under section 6042 of the Code (e.g.,
Form 1099–DIV) regarding distributions with respect to secu-
rities issued by a foreign corporation, and for individuals re-
ceiving such statements. The notice also describes when a
security (or an American depositary receipt in respect of such
security) issued by a foreign corporation that is other than or-
dinary or common stock (such as preferred stock) will satisfy
the readily tradable test.
Announcement 2004–82, page 834.
This announcement notifies Archer MSA trustees of their obliga-
tion to report the number of Archer MSAs established between
January 1, 2004, and June 30, 2004.
EXEMPT ORGANIZATIONS
Announcement 2004–87, page 834.
This announcement is a public notice of the suspension of the
federal tax exemption under section 501(p) of the Code of a
certain organization that has been designated as supporting
or engaging in terrorist activity or supporting terrorism. Contri-
butions made to this organization during the period that the or-
ganization’s tax-exempt status is suspended are not deductible
for federal tax purposes.
Announcement 2004–89, page 835.
Michael & Laura Gallop Family Foundation of Agoura Hills, CA,
no longer qualifies as an organization to which contributions
aredeductibleundersection170oftheCode.
ADMINISTRATIVE
Rev. Proc. 2004–63, page 795.
This procedure provides specifications for filing Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding,
Electronically or Magnetically. The procedure will be reprinted
as the current revision of Publication 1187. Rev. Proc.
2003–83 superseded.
Announcement of Declaratory Judgment Proceedings Under Section 7428 begins on page 835.
Fi
nding Lists begin on page ii.

The IRS Mission
Provide America’s 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. Bulletin
contents are compiled 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.—19
86 Code.
This part i
ncludes rulings and decisions based on provisions of
the Intern
al 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 Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV
.—Items of General Interest.
This par
t includes notices of proposed rulemakings, disbar-
ment an
d suspension lists, and announcements.
The last 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 last Bulletin of each semiannual period.
The c
ontents 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.
November 8, 20042004–45 I.R.B.

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
Section 42.—Low-Income
Housing Credit
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 280G.—Golden
Parachute Payments
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2004. See
Rev. Rul. 2004-102, page 784.
Section 382.—Limitation
on Net Operating Loss
Carryforwards and Certain
Built-In Losses Following
Ownership Change
The adjusted applicable federal long-term rate is
set forth for the month of November 2004. See Rev.
Rul. 2004-102, page 784.
Section 412.—Minimum
Funding Standards
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section
467.—Certain
Payment
sfortheUseof
Property or Services
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 482.—Allocation
of Income and Deductions
Among Taxpayers
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2004. See
Rev. Rul. 2004-102, page 784.
Section 483.—Interest on
Certain Deferred Payments
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 642.—Special
Rules for Credits and
Deductions
Federal short-term, mid-term, and long-term rates
are set forth for the month of November 2004. See
Rev. Rul. 2004-102, page 784.
Section 807.—Rules for
Certain Reserves
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 846.—Discounted
Unpaid Losses Defined
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 901.—Taxes
of Foreign Countries
and of Possessions of
United States
Modification of Rev. Rul. 95–63.
Rev. Rul. 95–63, with respect to coun-
tries described in section 901(j)(2)(A) of
the Code, is modified by providing that
Iraq ceased to be described in that section
on June 27, 2004. Rev. Rul. 95–63 modi-
fied.
Rev. Rul. 2004–103
This ruling modifies Rev. Rul. 95–63,
1995–2 C.B. 85, which lists countries sub-
ject to certain special rules under sections
901(j) and 952(a)(5) of the Code.
LAW AND ANALYSIS
Sections 901, 902, and 960 of the Code
generally allow U.S. taxpayers to claim a
foreign tax credit for income, war profits,
and excess profits taxes paid or accrued
(or deemed paid or accrued) to any foreign
country or to any possession of the United
States.
Section 901(j)(1)(A) denies the credit
for taxes paid or accrued (or deemed
paid or accrued under sections 902 or
960) to any country described in section
901(j)(2)(A) if the taxes are with respect
to income attributable to a period dur-
ing which section 901(j) applies. Section
901(j)(1)(B) requires taxpayers to apply
subsections (a), (b), and (c) of section 904
and sections 902 and 960 separately with
respect to income attributable to such a
period from sources within such country.
In addition, section 952(a)(5) provides that
subpart F income includes income derived
by a controlled foreign corporation from
any foreign country during any period
during which section 901(j) applies to that
foreign country.
The special rules under sections 901(j)
and 952(a)(5) cease to apply to a coun-
try when the Secretary of State certifies
to the Secretary of the Treasury that such
country is no longer described in section
901(j)(2)(A). Revenue Ruling 95–63 sets
forth the countries which are (or were)
described in section 901(j)(2)(A) and the
period during which the special rules un-
der sections 901(j) and 952(a)(5) apply
with respect to each such country. Based
on the certification by the Secretary of
State, this revenue ruling states the date on
which Iraq ceased to be described in sec-
tion 901(j)(2)(A).
HOLDINGS AND EFFECTIVE DATES
The list of countries in Revenue Ruling
95–63 is modified by changing the refer-
ence to Iraq as follows:
2004–45 I.R.B.783November 8, 2004

CountryStarting DateEnding Date
IraqFebruary 1, 1991June 27, 2004
For guidance on issues arising in a tax-
able year when section 901(j) ceases to ap-
ply to a country, see Rev. Rul. 92–62,
1992–2 C.B. 193.
EFFECT ON OTHER REVENUE
RULINGS
This ruling modifies Rev. Rul. 95–63,
1995–2 C.B. 85, with respect to countries
describedinsection901(j)(2)(A)ofthe
Code.
DRAFTING INFORMATION
The principal author of this revenue rul-
ingisMarkR.PollardoftheOfficeof
Associate Chief Counsel (International).
For further information regarding this rev-
enue ruling, contact Mr. Pollard at (202)
622–3850 (not a toll-free call).
Section 1274.—Determi-
nation of Issue Price in the
Case of Certain Debt Instru-
ments Issued for Property
(Also, Sections 42, 280G, 382, 412, 467, 468, 482,
483, 642, 807, 846, 1288, 7520, 7872.)
Federal rates; adjusted federal rates;
adjusted federal long-term rate and the
long-term exempt rate.For purposes of
sections 382, 642, 1274, 1288, and other
sections of the Code, tables set forth the
rates for November 2004.
Rev. Rul. 20
04–102
This revenue ruling provides various
prescribed rates for federal income tax
purposes for November 2004 (the current
month). Table 1 contains the short-term,
mid-term, and long-term applicable fed-
eral rates (AFR) for the current month
for purposes of section 1274(d) of the
Internal Revenue Code. Table 2 contains
the short-term, mid-term, and long-term
adjusted applicable federal rates (adjusted
AFR) for the current month for purposes
of section 1288(b). Table 3 sets forth the
adjusted federal long-term rate and the
long-term tax-exempt rate described in
section 382(f). Table 4 contains the ap-
propriate percentages for determining the
low-income housing credit described in
section 42(b)(2) for buildings placed in
service during the current month. Finally,
Table 5 contains the federal rate for deter-
mining the present value of an annuity, an
interest for life or for a term of years, or
a remainder or a reversionary interest for
purposes of section 7520.
REV. RUL. 2
004–102 TABLE 1
Applicable Federal Rates(AFR) for November 2004
Period for Compounding
AnnualSemiannu
al
Quarterl
y
Monthly
Short-term
AFR2.37%2.36%2.35%2.35%
110% AFR2.62%2.60%2.59%2.59%
120% AFR2.85%2.83%2.82%2.81%
130% AFR3.09%3.07%3.06%3.05%
Mid-te
rm
AFR3.55%3.52%3.50%3.49%
110% A
FR
3.91%3.87%3.85%3.84%
120% AFR4.26%4.22%4.20%4.18%
130% AFR4.63%4.58%4.55%4.54%
150%
AFR
5.35
%
5.28
%
5.25
%
5.22
%
175% AFR6.25%6.16%6.11%6.08%
Long
-term
AFR4.70%4.65%4.62%4.61%
110
%AFR
5.1
9%
5.1
2%
5.0
9%
5.0
7%
120% AFR5.66%5.58%5.54%5.52%
130% AFR6.14%6.05%6.00%5.98%
November 8, 20047842004–45 I.R.B.

REV. RUL. 2004–
102 TABLE 2
Adjusted AFR for November 2004
Period for Compounding
AnnualSemiannualQuarterlyMonthly
Short-term adjusted
AFR
1.68%1.67%1.67%1.66%
Mid-term adjusted AFR2.80%2.78%2.77%2.76%
Long-term ad
justed
AFR
4.20%4.16%4.14%4.12%
REV. RUL. 2004–102 TABLE 3
Rates Under Section 382 for November 2004
Adjusted federal long-term rate for the current month4.20%
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted
federal long-term rates for the current month and the prior two months.)4.51%
REV. RUL. 2004–102 TABLE 4
Appropriate Percentages Under Section 42(b)(2) for November 2004
Appropriate percentage for the 70% present value low-income housing credit7.96%
Appropriate percentage for the 30% present value low-income housing credit3.41%
REV. RUL. 2004–102 TABLE 5
Rate Under Section 7520 for November 2004
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest4.20%
S
ection 1288.—Treatment
o
f Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 6050P.—Returns
Relating to the Cancellation
of Indebtedness by Certain
Entities
26 CFR 1.6050P–1: Information reporting for dis-
charges of indebtedness by certain entities.
26 CFR 1.6050P–2: Organization a significant trade
or business of which is the lending of money.
T.D. 9160
DEPARTMENT OF
THE TREASURY
Internal Revenue Service
26 CFR Parts 1 and 602
Information Reporting Under
Section 6050P for Discharges
of Indebtedness
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Final regulations.
SUMMARY: This document contains fi-
nal regulations relating to the information
reporting requirement under section 6050P
of the Internal Revenue Code (Code) for
discharges of indebtedness. These final
regulations reflect the enactment of sec-
tion 6050P(c)(2)(D) by the Ticket to Work
and Work Incentives Improvement Act
of 1999. These final regulations provide
guidance on the information reporting re-
quirements for discharges of indebtedness
by organizations that have a significant
trade or business of lending money. This
document also contains amendments to
the existing final regulations to reflect the
amendments to section 6050P by the Debt
Collection Improvement Act of 1996.
DATES:Effective date: These regulations
are effective October 25, 2004.
Applicability date: These regulations
are applicable to discharges of indebted-
ness occurring on or after January 1, 2005.
FOR FURTHER INFORMATION
CONTACT: Joseph P. Dewald, at (202)
622–4910 (not a toll-free number).
2004–45 I.R.B.785November 8, 2004

SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to
26 CFR parts 1 and 602. The amend-
ments describe circumstances in which an
organization has a significant trade or busi-
ness of lending money for purposes of
section 6050P(c)(2)(D). The amendments
also conform the existing final regulations
under section 6050P to cover applicable
entities, including executive, judicial, and
legislative agencies.
In general, section 6050P(a) requires
certain organizations (applicable entities)
to file information returns with the Inter-
nal Revenue Service (IRS), and to furnish
information statements to debtors, report-
ing discharges of indebtedness of $600 or
more. As enacted by the Omnibus Budget
Reconciliation Act of 1993, Public Law
103–66 (107 Stat. 312, 531–532 (1993)),
section 6050P required “applicable finan-
cial entities” (including Federal executive
agencies) to report discharges of indebted-
ness. The Debt Collection Improvement
Act of 1996, Public Law 104–134 (110
Stat. 1321, 368–369 (1996)) (the 1996
Act), amended section 6050P to cover “ap-
plicable entities.” Section 6050P(c)(1) as
amended defines anapplicable entityto in-
clude: (1) any executive, judicial, or leg-
islative agency (as defined in 31 U.S.C.
3701(a)(4)); and (2) any applicable finan-
cial entity.
Section 6050P(c)(2)(D) was enacted
by section 553(a) of the Ticket to Work
and Work IncentivesImprovement Act
of 1999, Public Law 106–170 (113 Stat.
1860, 1931 (1999)) (the 1999 Act), ef-
fective for discharges of indebtedness
occurring after December 31, 1999. The
1999 Act amended section 6050P by ex-
panding the applicable financial entities
required to report. As expanded, the term
includes any organization “a significant
trade or business of which is the lending
of money.”
The IRS issued Notice 2000–22,
2000–1 C.B. 902, which provides that
penalties under sections 6721 and 6722
for failures to report discharges of in-
debtedness occurring before January 1,
2001, will not be imposed on organiza-
tions newly required to report under sec-
tion 6050P(c)(2)(D). In Notice 2001–8,
2001–1 C.B. 374, for these same organi-
zations, the IRS extended the waiver of
penalties to failures to report discharges
of indebtedness occurring before the first
calendar year that begins at least two
months after final regulations under sec-
tion 6050P(c)(2)(D) are issued.
A notice of proposed rulemak-
ing under section 6050P(c)(2)(D)
(REG–107524–00, 2002–2 C.B. 110) was
published in theFederal Register(67 FR
40629) on June 13, 2002. The proposed
regulations address whether an organi-
zation has a significant trade or business
of lending money for purposes of section
6050P(c)(2)(D). The proposed regulations
also reflect the amendments made by the
1996 Act. A public hearing was held
on the proposed regulations on October
8, 2002. The IRS received written and
electronic comments responding to the
notice of proposed rulemaking. After con-
sideration of all comments, the proposed
regulations are adopted as revised by this
Treasury decision.
Explanation of Provisions and
Summary of Comments
Section 6050P(c)(2)(D) requires any
organization “a significant trade or busi-
ness of which is the lending of money”
to report discharges of indebtedness. The
proposed regulations provide guidance on
whetheranorganizationisengagedina
trade or business of lending money and
whether that trade or business is signifi-
cant. In general, the proposed regulations
provide that the lending of money is a
significant trade or business if money is
loaned on a regular and continuing basis.
The proposed regulations provide three
safe harbors under which organizations
will be considered not to have a signifi-
cant trade or business of lending money.
The final regulations retain these rules.
1.Comments Concerning the Proposed
Regulations
A.Obligations acquired from persons
other than the debtor
Several commentators requested clari-
fication of the information reporting re-
quirements for debt obligations acquired
from persons other than the debtor. Sec-
tion 1.6050P–2(e) of the proposed regula-
tions provides that lending money includes
acquisition of a debt obligation from a
prior holder of the obligation and that gross
income from an indebtedness is treated as
gross income from lending money regard-
less of whether the debt was originated by
the organization itself or by a related party.
The final regulations clarify that a debt
obligation acquired from the debtor or any
person other than the debtor is subject to
reporting under section 6050P(c)(2)(D) if
the owner of the obligation is engaged in
a significant trade or business of lending
money.
B.Gross income from lending of money
One commentator requested clarifi-
cation on what amounts constitute gross
income from lending money. Section
1.6050P–2(d) of the proposed regulations
provides that gross income from lending
money includes income from interest, fees,
penalties, merchant discount, interchange,
and gains arising from the sale of an in-
debtedness. The final regulations clarify
that gross income from lending money in-
cludes: interest (including qualified stated
interest, original issue discount, and mar-
ket discount); gains arising from the sale or
other disposition of indebtedness; penal-
ties with respect to indebtedness (whether
or not the penalty is interest for Federal
tax purposes); and fees with respect to in-
debtedness, including merchant discount
or interchange (whether or not the fee is
interest for Federal tax purposes).
C.“Factoring” transactions
(i) Commentators’ Description of
“Factoring” Transactions
Several commentators addressed re-
porting issues associated with what the
commentators called “factoring.” One
commentator described factoring transac-
tions, primarily between unrelated parties,
as ordinarily involving (a) a factor, who
performs the functions described below
with respect to a pool of short-term ac-
counts receivable (30-, 60-, or 90-day
debt), (b) the factor’s client, who sells
goods in exchange for the short-term ac-
counts receivable, and (c) the client’s
customers, who buy the goods and who
issue the accounts receivable. According
to the commentator, the factor generally
performs the following functions: initial
credit investigation, selective assumption
of the risk of loss (sometimes referred to
November 8, 20047862004–45 I.R.B.

as guaranteeing credit), on-going credit
monitoring of the client’s customers, col-
lection, and bookkeeping.
As described by the commentator, af-
ter the credit investigation (on either a cus-
tomer-specific or a pooled basis), the fac-
tor informs the client if the factor is will-
ing to guarantee the receivables from some
or all of the client’s customers. For cus-
tomers whose accounts receivable the fac-
tor will not guarantee, the client may en-
ter into the sale and accept an account re-
ceivable without the benefit of the factor’s
guarantee or may refuse to extend credit
and either make the sale for cash or forego
the sale altogether.
The commentator described factors’
competitive fees for typical transactions
with unrelated parties as ranging between
0.35 percent of the face value of the ac-
counts receivable (if the client retains the
collection function)and 0.70 percent of
that face value (if the factor undertakes
the collection function). In either case, the
face value on the basis of which the fee is
computed includesany accounts receiv-
able that the clientaccepts from customers
even though the factoris unwilling to as-
sume the risk of loss on those accounts
receivable. The factor determines the rate
at which fees are charged on the basis
of the initial credit investigation and of
whether the factor undertakes collection
and bookkeeping.
To facilitate collection, according to the
commentator, factors generally take legal
title to the accounts receivable either at the
time of, or shortly after, the sales transac-
tions. If the factor performs all collection,
the factor may take title to all accounts
receivable as soon as they are issued by
the customers. If, however, the client re-
tains the initial collection responsibilities
for a specified short period of time, the
factor may take title at the end of that pe-
riod only to those accounts receivable that
are not paid within that period. If the fac-
tor guarantees the accounts receivable and
collects, the factor pays the client, net of
the factor’s fees, either soon after the re-
ceivables are collected or by a specified
time if the receivables have not been col-
lected. If the receivables are not guaran-
teed, the client receives payment only if
and when the customer pays. The com-
mentator explained that, if the factor has
guaranteed the receivables, the factor has
the right to recovery against a customer.
If the factor does not guarantee the receiv-
able and assumes collection responsibility,
the factor assigns title back to the client
when the receivables become uncollectible
under the contract.
For some clients, the factor also pro-
vides liquidity by advancing funds against
the client’s aggregate accounts receivable.
Advances are made based on the factor’s
assessment of the client’s creditworthiness
and are treated as a reduction of the amount
the factor owes the client when the receiv-
ables are collected or, if the receivables are
guaranteed, when the factor is required to
pay the client under the guarantee. These
advances are satisfied by the factor reduc-
ing the payments otherwise owed to the
client. Interest is charged for the period
of the outstanding advances, and the inter-
est provides additional income to the fac-
tor over and above the fees for the credit
investigation, creditguarantee, collection,
and bookkeeping functions.
The commentator urged that the unique
aspects of these three-party relations make
it extremely difficult for factors to report
discharges under section 6050P. The com-
mentator pointed out that, although the fac-
tor may hold title to a customer account re-
ceivable at the time the account receivable
is discharged, the client is the one with a
direct relation with the customer. Even if
the factor agreed to guarantee accounts re-
ceivable of a customer, that decision may
have been made after an inquiry into the
characteristics of the client’s customers as
a group, without any specific knowledge
about the particular customer. Thus, the
factor may know nothing about a customer
that happens to be in default.
For these reasons, the commentator
suggested that reporting under section
6050P should be the responsibility of the
client, which has, or had, a direct rela-
tion with the debtor. The commentator
further suggested that, if factors are re-
quired to report, the $600 dollar threshold
should be increased or any inclusion of the
debtor’s taxpayer identification number
(TIN) should be optional.
The reporting requirements under sec-
tion 6050P fall on the entity that owns the
debt that is discharged. In the case of the
transactions that the commentator called
“factoring,” therefore, it is necessary to de-
termine who is the owner of the account
receivable for Federal tax purposes. This
determination has to be made on the basis
of all the facts and circumstances.
The first question is whether the lend-
ing of money is a significant trade or busi-
ness of the factor for the taxable year. This
will be the case if, on a regular and con-
tinuing basis during the calendar year, the
factor makes advances to the clients or ac-
quires the clients’ accounts receivable. If
the factor is an applicable entity for pur-
poses of section 6050P(c)(2)(D), the sec-
ond question is whether the factor owned
the account receivable for Federal tax pur-
poses when the account receivable was
discharged. Section 6050P(c)(2)(D) does
not require reporting by a factor if the fac-
tor was not the owner of the account re-
ceivable for Federal tax purposes at the
time of the identifiable event marking the
discharge.
The final regulations do not provide
guidance on whether a factoring transac-
tion should be treated as a purchase of
accounts receivable for Federal tax pur-
poses. Whether or not a factoring trans-
action is treated as a purchase for Federal
tax purposes depends on the facts and cir-
cumstances of each transaction. The final
regulations provide an example describing
the reporting obligations if an account re-
ceivable is treated as purchased for Fed-
eral tax purposes and, alternatively, if it
is not treated as purchased. This exam-
ple, however, is not intended to address
whether a purchase has taken place for
Federal tax purposes, and, thus, no infer-
ence is intended concerning the character
of the transactions addressed in these regu-
lations for purposes of section 6050P or for
other provisions, including for purposes of
determining effectively connected income
of a foreign factor under §1.864–4(c)(5).
After evaluating the concerns described
by the commentator and the requirements
imposed by section 6050P, the IRS and
the Treasury Department believe that the
reporting requirements of these final reg-
ulations, combined with the January 1,
2005, effective date, provide reasonable
and administrable rules and are consistent
with the general requirements applica-
ble to information reporting. The final
regulations, therefore, do not adopt the
recommendation that the $600 threshold
be raised for debt obligations acquired
from persons other than the debtor, nor do
the final regulations adopt the recommen-
dation that a factor be allowed to report
2004–45 I.R.B.787November 8, 2004

discharges without the debtor’s TIN. The
$600 threshold and the requirement to in-
clude the debtor’s TIN derive from section
6050P.
(ii) Filer May Request a Waiver of Penalty
if the Filer Cannot Obtain the Debtor’s
TIN
If section 6050P requires an applicable
entity to file an information return, the ap-
plicable entity may request a waiver un-
der section 6724 of any information report-
ing penalties under section 6721 and 6722.
Under section 6724, the IRS may waive
the penalties if the failure is due to reason-
able cause and is not due to willful neglect.
Therefore, upon a showing of reasonable
cause, the IRS may waive the penalty un-
der section 6721 for failure to file com-
plete and correct information returns (in-
cluding the failure to include a TIN) and
the penalty under section 6722 for failure
to furnish complete and correct informa-
tion statements (including the failure to in-
clude a TIN).
Under §301.6724–1(a)(2)(ii), a penalty
may be waived for reasonable cause if the
failure arose from events beyond the filer’s
control. Section 301.6724–1(c)(6)(i) pro-
vides that events beyond the filer’s con-
trol include the failure of another person
to provide the information necessary for
the filer to file a correct information re-
turn. Section 301.6724–1(a)(2) of the reg-
ulations provides that to establish reason-
able cause, the filer must have acted in a re-
sponsible manner both before and after the
failure occurred. Section 301.6724–1(e)
provides that a filermust undertake to act
in a responsible manner in order to estab-
lish reasonable cause for failure to include
a TIN (the TIN solicitation rules).
Section 1.6050P–1(e)(6) of the existing
final regulations provides special TIN so-
licitation rules for discharges of indebted-
ness. Under these rules, a filer must under-
take to act in a responsible manner for pur-
poses of section 6724 and the regulations.
Section 1.6050P–1(e)(6) provides that a
TIN obtained at the time of the indebted-
ness satisfies the solicitation requirements,
unless the entity required to file knows that
the TIN is incorrect. The regulations re-
quire the filer to solicit the debtor’s TIN
if it has not obtained the debtor’s TIN
prior to the occurrence of an identifiable
event marking the discharge of indebted-
ness. The regulations further provide that,
if the filer solicits the debtor’s TIN in the
manner described in §301.6724–1(e)(1)(i)
and (2), the filer is deemed to have acted
in a responsible manner for purposes of
section 6724. Section 1.6050P–1(e)(6)(ii)
contemplates that the filer may undertake
the TIN solicitation after the occurrence of
the identifiable event. Therefore, a fac-
tor that fails to include a debtor’s TIN
on the required information return and in-
formation statement may request a waiver
of penalties and may establish reasonable
cause under section 6724 if it complies
with the special TIN solicitation rules in
§1.6050P–1(e)(6).
D.Related sellers of nonfinancial goods
or services
Commentators requested clarification
as to whether a finance company that ac-
quires installment sales contracts from
a related seller should be considered an
organization that has a significant trade
or business of lending money even if the
seller would qualify for the exception to
reporting for seller-financing transactions.
Specifically, the commentators urged that
a finance company related to a com-
monly owned automobile dealership not
be required to report the discharge of an
installment sales contract that originated
between the automobile dealership and an
automobile purchaser.
The preamble to the proposed regula-
tions explains that section 6050P(c)(2)(D)
applies on an entity-by-entity basis and
that the seller-financing exception is not
available to a separate financing subsidiary
of a retailer. The 1999 Act took an en-
tity-by-entity approach when it expanded
the scope of section 6050P to reach “any
organization a significant trade or business
of which is the lending of money (such as
finance companies and credit card compa-
nieswhether or not affiliated with finan-
cial institutions).” See Joint Committee on
Taxation Staff,General Explanation of Tax
Legislation Enacted in the 106
th
Congress,
107
th
Cong., 1
st
Sess. 48 (2001) (emphasis
added). The final regulations, therefore,
do not adopt the recommendation to pro-
vide an exception to reporting for a com-
pany that finances purchases by the cus-
tomers of a separate, but related, seller of
nonfinancial goods or services.
E.Reporting amounts that section 108
excludes from the debtor’s income
Several commentators noted that of-
ten debtors may be insolvent at the time
the debt is discharged and that, in these
cases, the discharge is excludable from
income under section 108(a)(1)(B). The
legislative history to section 6050P, how-
ever, reflects that Congress intended en-
tities to report discharges regardless of
whether the debtor is subject to tax on the
discharged debt, including whether the
discharge qualifies for exclusion under
section 108. See H.R. Conf. Rep. No.
213, 103
d
Cong., 1
st
Sess. 671 (1993).
This principle is reflected in the general
rule of §1.6050P–1(a)(3) of the existing
final regulations and is not changed by
this Treasury Decision. The existing reg-
ulations provide, “Except as otherwise
provided in [§1.6050P–1], discharged in-
debtedness must be reported regardless of
whether the debtor is subject to tax on the
discharged debt under sections 61 and 108
or otherwise by applicable law.”
F.Reporting discharges of FFELP loans
Other commentators requested clar-
ification on the information reporting
requirements for public, nonprofit guaran-
tors that participate in the Federal Family
Education Loan Program (FFELP) if the
debtor defaults on the FFELP loan. Ac-
cording to the comments, a typical FFELP
transaction involves a borrower, a lender
(such as a bank, savings and loan asso-
ciation, credit union, school, or state or
private nonprofit agency), a state or private
nonprofit organization (guaranty agency),
and the U.S. Department of Education. If
a guaranty agency receives a default claim
for nonpayment of a FFELP student loan,
the guaranty agency generally pays a per-
centage of the outstanding balance to the
holder of the loan. The U.S. Department
of Education, in turn, reimburses the guar-
anty agency for a percentage of the default
claim paid to the holder of the loan. The
guaranty agency then acts on behalf of the
U.S. Department of Education collecting
against the borrower and remitting any
amount collected, less a percentage for
collection costs, to the U.S. Department of
Education.
One commentator suggested that the
activities of the guaranty agency do not
November 8, 20047882004–45 I.R.B.

constitute the lending of money. This
commentator suggested that guarantors of
FFELP student loans are not applicable en-
tities as defined in section 6050P(c)(2)(D).
Another commentator suggested that the
final regulations provide that the informa-
tion reporting requirements under section
6050P do not apply to any student loan
made under Title IV of the Higher Educa-
tion Act, including student loans under the
FFELP.
The information reporting require-
ments under section 6050P apply to stu-
dent loans made under Title IV of the
Higher Education Act. If the owner of the
student loan for Federal tax purposes is
an entity or organization that is an appli-
cable entity within the meaning of section
6050P(c)(1), the owner must report under
section 6050P upon the occurrence of an
identifiable event marking the discharge
of the indebtedness.
2.Comments Concerning the Existing
Final Regulations
Several commentators raised issues
relating to the reporting requirements in
§1.6050P–1 of the existing final regula-
tions. These comments are beyond the
scope of this regulation project, which ad-
dresses whether an organization has a sig-
nificant trade or business of lending money
for purposes of section 6050P(c)(2)(D),
but these comments may be addressed in
future guidance.
A.Amounts forgiven pursuant to the terms
of a loan
Commentators requested clarification
as to whether an organization is required
to report amounts forgiven pursuant to
the terms of a debt obligation, including
loan forgiveness under the FFELP upon a
stated event (such as death, disability, or
satisfaction of the service requirements of
the Teacher Loan Forgiveness Program).
The IRS may issue future guidance un-
der section 6050P addressing amounts
forgiven pursuant to the terms of a debt
obligation for purposes of section 6050P.
Pending issuance of future guidance, ap-
plicable entities will not be subject to
penalties under section 6721 and section
6722 for failure to report under section
6050P amounts forgiven pursuant to the
terms of a debt obligation.
B.Amounts that are defined as
“indebtedness” under §1.6050P–1(c) of
the existing final regulations but that do
not arise in the context of a money-lending
transaction
One commentator requested clarifica-
tion of the information reporting require-
ments for amounts that are owed to an
organization but that do not arise in the
context of a money-lending transaction.
The commentator suggested that the def-
inition of indebtedness in §1.6050P–1(c)
of the existing final regulations should
be revised to require reporting only of
discharged amounts that would give rise
to income under section 61(a)(12) and
that the definition should cover only
amounts arising in money-lending trans-
actions. Alternatively, the commentator
suggested that amounts owed that arise
in non-money-lending transactions should
not be “indebtedness” for purposes of sec-
tion 6050P unless, and until, reduced to
judgment. This commentator also sug-
gested that discharges of amounts such as
fees, penalties, administrative costs, and
fines should not be subject to reporting
under section 6050P regardless of whether
the transaction is a money-lending trans-
action. Section 1.6050P–1(d)(3) of the
existing final regulations provides an ex-
ception to reporting for discharges of these
amounts only in lending transactions.
In particular, the commentator was con-
cerned about amountsarising in leasing
transactions. An organization that en-
gages only in transactions that are treated
as leases, and not as sales, for Federal
tax purposes is not required to report
under section 6050P, because leasing is
not lending money for purposes of sec-
tion 6050P(c)(2)(D) and §1.6050P–2(a).
However, if an organization is otherwise
engaged in a significant trade or business
of lending money and is also engaged
in leasing transactions, the existing final
regulations under section 6050P would
require the organization to report the dis-
charge of any amount owed to it, including
fees, administrative costs, and fines for the
non-lending leasing transactions.
The IRS and the Treasury Department
may issue future guidance under section
6050P addressing the requirements for re-
porting amounts discharged in non-lend-
ing transactions. Pending issuance of fu-
ture guidance, applicable entities will not
be subject to penalties under section 6721
and section 6722 for failure under sec-
tion 6050P to report amounts discharged in
non-lending transactions.
Effective Date
In order to give organizations that are
subject to section 6050P(c)(2)(D) time to
comply with the reporting requirements of
section 6050P, these regulations apply to
discharges that occur on or after January
1, 2005.
Special Analyses
It has been determined that this Trea-
sury decision is not asignificant regula-
tory action as defined in Executive Order
12866. Therefore, a regulatory assessment
is not required. It has also been determined
that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does
not apply to these regulations, and because
the regulations do not impose a collection
of information on small entities, the Regu-
latory Flexibility Act (5 U.S.C. chapter 6)
does not apply. Pursuant to section 7805(f)
of the Code, the notice of proposed rule-
making preceding this regulation was sub-
mitted to the Chief Counsel for Advocacy
of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal author of these final
regulations is Joseph P. Dewald, Office
of Associate Chief Counsel (Procedure
and Administration), Administrative Pro-
visions and Judicial Practice Division.
However, other personnel from the IRS
and Treasury Department participated in
the development of the regulations.
*****
Adoption of Amendment to the
Regulations
Accordingly, 26 CFR parts 1 and 602
are amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 is amended by adding an entry in
numerical order to read, in part, as follows:
Authority: 26 U.S.C. 7805. * * *
Section 1.6050P–2 also issued under 26
U.S.C. 6050P. * * *
2004–45 I.R.B.789November 8, 2004

Par. 2. Section 1.6050P–0 is amended
as follows:
1. The introductory text is amended by
adding the language “and §1.6050P–2”
immediately after the language
“§1.6050P–1”.
2. The entry for §1.6050P–1 is
amended by removing the word “finan-
cial”.
3. The entry for §1.6050P–1(e)(2)(v) is
added.
4. The entries for §§1.6050P–1(e)(5)
through (e)(8) are redesignated as entries
for §§1.6050P–1(e)(6) through (e)(9) and
a new entry for §1.6050P–1(e)(5) is added.
5. The entries for §1.6050P–2 are
added.
The additions read as follows:
§1.6050P–0 Table of contents.
*****
§1.6050P–1 Information reporting for
discharges of indebtedness by certain
entities.
*****
(e) * * *
(2) * * *
(v) No double reporting.
*****
(5) Entity formed or availed of to hold
indebtedness.
*****
§1.6050P–2 Organization a significant
trade or business of which is the lending
of money.
(a) In general.
(b) Safe harbors.
(1) Organizations not subject to section
6050P in the previous calendar year.
(2) Organizations that were subject to
section 6050P in the previous calendar
year.
(3) No test year.
(c) Seller financing.
(d) Gross income from lending of
money.
(e) Acquisition of an indebtedness from
a person other than the debtor included in
lending money.
(f) Test year.
(g) Predecessor organization.
(h) Examples.
(i) Effective date.
Par. 3. Section 1.6050P–1 is amended
as follows:
1. The section heading for §1.6050P–1
is amended by removing the word “finan-
cial”.
2. Paragraphs (a)(1), (b)(2)(i)(F), (c),
(e)(2)(i), (e)(3), (e)(7), (f)(1) introductory
text, (f)(1)(ii), and (f)(2) are amended by
removing the word “financial”.
3. The first sentence of paragraph (c)
is amended by adding the language “and
§1.6050P–2” immediately after the word
“section”.
4. Paragraph (e)(2)(v) is added.
5. Paragraph (e)(4) is amended by re-
moving “6050P(c)(1)(A)” each time it ap-
pears and adding “6050P(c)(2)(A)” in its
place and by removing “6050P(c)(1)(C)”
and adding “6050P(c)(2)(C)” in its place.
6. Paragraphs (e)(5) through (e)(8) are
redesignated as (e)(6) through (e)(9) and a
new paragraph (e)(5) is added.
7. Paragraph (e)(7)(i), as redesignated,
is amended by removing “(e)(6)” where it
appears and adding “(e)(7)” and paragraph
(e)(7)(ii), as redesignated, is amended by
removing “(e)(6)(i)” where it appears and
adding “(e)(7)(i)” in its place.
8. Paragraph (h)(1) is amended by
adding “and, except paragraph (e)(5) of
this section, which applies to discharges
of indebtedness occurring after December
31, 2004.”, immediately after the language
“1994”.
The additions read as follows:
§1.6050P–1 Information reporting for
discharges of indebtedness by certain
entities.
*****
(e) * * *
(2) * * *
(v)No double reporting. If multiple
creditors are considered to hold interests in
an indebtedness for purposes of this para-
graph (e)(2) by virtue of holding owner-
ship interests in an entity, and the entity
is required to report a discharge of that in-
debtedness under paragraph (e)(5) of this
section, then the multiple creditors are not
required to report the discharge of indebt-
edness.
*****
(5)Entity formed or availed of to
hold indebtedness.Notwithstanding
§1.6050P–2(b)(3), if an entity (the trans-
feree entity) is formed or availed of by
an applicable entity (within the meaning
of section 6050P(c)(1)) for the principal
purpose of holding indebtedness acquired
(including originated) by the applica-
ble entity, then, for purposes of section
6050P(c)(2)(D), the transferee entity has
a significant trade or business of lending
money.
*****
Par. 4. Section 1.6050P–2 is added to
read as follows:
§1.6050P–2 Organization a significant
trade or business of which is the lending
of money.
(a)In general. For purposes of section
6050P(c)(2)(D), the lending of money is a
significant trade or business of an organi-
zation in a calendar year if the organization
lends money on a regular and continuing
basis during the calendar year.
(b)Safe harbors—(1)Organizations
not subject to section 6050P in the pre-
vious calendar year. For an organization
that was not required to report under sec-
tion 6050P in the previous calendar year,
the lending of money is not treated as a
significant trade or business for the cal-
endar year in which the lending occurs if
gross income from lending money (as de-
scribed in paragraph (d) of this section) in
the organization’s most recent test year (as
defined in paragraph (f) of this section) is
both less than $5 million and less than 15
percent of the organization’s gross income
for that test year.
(2)Organizations that were subject to
section 6050P in the previous calendar
year. For an organization that was required
to report under section 6050P for the pre-
vious calendar year, the lending of money
is not treated as a significant trade or busi-
ness for the calendar year in which the
lending occurs if gross income from lend-
ing money (as described in paragraph (d)
of this section) in each of the organiza-
tion’s three most recent test years is both
less than $3 million and less than 10 per-
cent of the organization’s gross income for
that test year.
(3)No test year. The lending of money
is not treated as a significant trade or busi-
ness for an organization for the calendar
year in which the lending occurs if the or-
ganization does not have a test year for that
calendar year.
November 8, 20047902004–45 I.R.B.

(c)Seller financing. If the principal
trade or business of an organization is
selling nonfinancial goods or providing
nonfinancial services and if the organ-
ization extends credit to the purchasers
of those goods or services to finance the
purchases, then, for purposes of section
6050P(c)(2)(D), these extensions of credit
are not a significant trade or business of
lending money.
(d)Gross income from lending of
money. For purposes of this section, gross
income from lending of money includes—
(1) Income from interest, including
qualified stated interest, original issue dis-
count, and market discount;
(2) Gains arising from the sale or other
disposition of indebtedness;
(3) Penalties with respect to indebted-
ness (whether or not the penalty is interest
for Federal tax purposes); and
(4) Fees with respect to indebtedness,
including merchant discount or inter-
change (whether or not the fee is interest
for Federal tax purposes).
(e)Acquisition of an indebtedness from
a person other than the debtor included in
lending money. For purposes of this sec-
tion, lending money includes acquiring an
indebtedness not only from the debtor at
origination but also from a prior holder of
the indebtedness. Gross income arising
from indebtedness is gross income from
the lending of money without regard to
who originated the indebtedness. If an or-
ganization acquires an indebtedness, the
organization is required to report any can-
cellation of the indebtedness if the organ-
ization is engaged in a significant trade or
business of lending money.
(f)Test year. For any calendar year, a
test yearis a taxable year of the organiza-
tion that ends before July 1 of the previous
calendar year.
(g)Predecessor organization.Ifanor-
ganization acquires substantially all of the
property that was used in a trade or busi-
ness of some other organization (the prede-
cessor) (including when two or more cor-
porations are parties to a merger agree-
ment under which the surviving corpora-
tion becomes the owner of the assets and
assumes the liabilities of the absorbed cor-
poration(s)) or was used in a separate unit
of the predecessor, then whether the organ-
ization at issue qualifies for one of the safe
harbors in paragraph (b) of this section is
determined by also taking into account the
test years, reporting obligations, and gross
income of the predecessor.
(h)Examples. The rules of this section
are illustrated by the following examples:
Example 1.(i)Facts. Finance Company A, a
calendar year taxpayer, was formed in Year 1 as a
non-bank subsidiary of Manufacturing Company and
has no predecessor. A lends money to purchasers
of Manufacturing Company’s products on a regular
and continuing basis to finance the purchase of those
products. A’s gross incomefrom stated interest in
Year 1 is $4.7 million. In Year 1, A’s gross income
from fees and penalties with respect to the indebted-
ness is $0.5 million, and A has no other gross income
from lending money within the meaning of paragraph
(d) of this section.
(ii)Results. Section 6050P does not require A to
report discharges of indebtedness occurring in Years
1 or 2, because A has no test year for those years.
Notwithstanding that A lends money in those years on
a regular and continuing basis, under paragraph (b)(3)
of this section, A does not have a significant trade or
business of lending money in those years for purposes
of section 6050P(c)(2)(D). However, for Year 3, A’s
test year is Year 1. A’s gross income from lending
in Year 1 is not less than $5 million for purposes of
the applicable safe harbor of paragraph (b)(1) of this
section. Because A lends money on a regular and
continuing basis and does not meet the applicable safe
harbor, section 6050P requires A to report discharges
of indebtedness occurring in Year 3.
Example 2.(i)Facts. The facts are the same as in
Example 1, except that A is a division of Manufactur-
ing Company, rather than a separate subsidiary. Man-
ufacturing Company’s principal activity is the manu-
facture and sale of non-financial products, and, other
than financing the purchase of those products, Man-
ufacturing Company does not extend credit or other-
wise lend money.
(ii)Results. Under paragraph (c) of this section,
that financing activity is not a significant trade or
business of lending money for purposes of section
6050P(c)(2)(D), and section 6050P does not require
Manufacturing Company to report discharges of in-
debtedness.
Example 3.(i)Facts. Company B, a calendar year
taxpayer, is formed in Year 1. B has no predecessor
and a part of its activities consists of the lending of
money. B packages and sells part of the indebtedness
it originates and holds the remainder. B is engaged
in these activities on a regular and continuing basis.
For Year 1, the sum of B’s gross income from sales
of the indebtedness, plus other income described in
paragraph (d) of this section, is only $4.8 million, but
it is 16% of B’s gross income in Year 1.
(ii)Results. Because B lends money on a regular
and continuing basis and does not meet the applicable
safe harbor of paragraph (b)(1) of this section, section
6050P requires B to report discharges of indebtedness
occurring in Year 3. B is not required to report dis-
charges of indebtedness in Years 1 and 2 because B
has no test year for Years 1 and 2.
Example 4.(i)Facts. The facts are the same as in
Example 3. In addition, in each of Years 2, 3, and 4,
the sum of B’s gross income from sales of the indebt-
edness, plus other income described in paragraph (d)
of this section, is less than both $3 million and 10%
of B’s gross income.
(ii)Results. (A) Because B was required to re-
port under section 6050P for Year 3, the applicable
safe harbor for Year 4 is paragraph (b)(2) of this sec-
tion, which is satisfied only if B’s gross income from
lending activities for each of the three most recent
test years is less than both $3 million and 10% of B’s
gross income. For Year 4, even though B has only
two test years, B’s gross income in one of those test
years, Year 1, causes B to fail to meet this safe harbor.
Accordingly, B is required to report discharges of in-
debtedness under section 6050P in Year 4. For Year
5, B’s three most recent test years are Years 1, 2, and
3. However, B’s gross income from lending activities
in Year 1 is not less than $3 million and 10% of B’s
gross income. Accordingly, section 6050P requires B
to report discharges of indebtedness in Year 5.
(B) For Year 6, B satisfies the applicable safe har-
bor requirements of paragraph (b)(2) of this section
for each of the three most recent test years (Years 2,
3, and 4). Therefore, section 6050P does not require
B to report discharges of indebtedness in Year 6. Be-
cause B is not required to report for Year 6, the ap-
plicable safe harbor for Year 7 is the one contained
in paragraph (b)(1) of this section, and thus the only
relevant test year is Year 5.
Example 5.(i)Facts.(A)CompanyC,acalendar
year taxpayer, was formed in Year 1 and, on a regular
and continuing basis, enters into the following trans-
actions with its clients, all of whom are unrelated par-
ties to C. C does not have any other income.
(B) C’s clients sell goods to customers, frequently
accepting as payment accounts receivable that are due
in 30 to 90 days. Under a contract with each client, C
investigates the creditworthiness of the client’s cus-
tomers with respect to the prospective sales, and, for
each customer, C determines whether, and to what
extent, C is willing to assume the risk of loss on ac-
counts receivable to be issued by the customer. C’s
decision whether to assume risk of loss may be based
on an evaluation of the creditquality of particular cus-
tomers or on the aggregate credit quality of all of the
client’s prospective customers. If C is unwilling to
assume the risk, the client either may refuse to extend
any credit to the customer or may accept the account
receivable and bear the risk of loss.
(C) Pursuant to some contracts between C’s
clients and C, C’s clients assign legal title to the
accounts receivable to C when the accounts receiv-
able are issued by the customers. For these accounts
receivable, C agrees to undertake collections and
to remit the amounts collected to the client, less a
fee of 0.70 percent of the face value of the accounts
receivable. Pursuant to other contracts between C’s
clients and C, C’s clients retain legal title to the
accounts receivable and retain the initial collection
responsibility. For these accounts receivable, C’s fee
is reduced to 0.35 percent. Both groups of accounts
receivable include accounts receivable for which C
has assumed the risk of loss and accounts receivable
for which C has not assumed the risk of loss.
(D) Based on all the facts and circumstances,
C acquires ownership for Federal tax purposes of
some, but not all, of the accounts receivable that it
has agreed to collect and of some, but not all, of the
accounts receivable for which the client has retained
collection responsibility.
(E) In Year 1, C’s total fee income with respect to
accounts receivable of which it acquired tax owner-
ship was $2 million. C’s fee income in Year 1 from
2004–45 I.R.B.791November 8, 2004

accounts receivable of which it did not acquire tax
ownership was $700,000. C does not have any other
income for Year 1.
(F) In Year 3, there were discharges of $950,000,
representing $100,000 of customer defaults on those
accounts receivable of which C was the owner for
Federal tax purposes at the time of the identifiable
event marking the discharge and $850,000 of cus-
tomer defaults on the accounts receivable of which
the clients, and not C, were the owner. Whenever C
determined the uncollectibility of an account receiv-
able for which it had not assumed the risk of loss, C
reassigned title to the account receivable to the appro-
priate client. Each defaulting customer defaulted on
an account receivable with an outstanding balance of
at least $600.
(ii)Results. (A) For Year 3, C’s test year is Year 1.
Under paragraph (e) of this section, C’s $2 million fee
income from the accounts receivable of which it ac-
quired tax ownership is “gross income from lending
money” for purposes of paragraph (b) of this section,
because C was the owner of the accounts for Federal
tax purposes. Under paragraph (e) of this section, C’s
$700,000 fee income from the accounts receivable of
which it did not acquire tax ownership is not “gross
income from lending money” for purposes of para-
graph (b) of this section, because C was not the owner
of the accounts receivable for Federal tax purposes.
In Year 1, therefore, C’s gross income from lending
money is less than $5 million but is not less than 15%
of C’s gross income. Because C lends money on a
regular and continuing basis and does not meet the
applicable safe harbor, section 6050P requires C to
report discharges of indebtedness occurring in Year
3.
(B) In Year 3, section 6050P requires C to re-
port the $100,000 of discharges of the accounts re-
ceivable of which C was the owner for Federal tax
purposes at the time of the identifiable event mark-
ing the discharge. Unlessan exception to reporting
under paragraph (b) or (c) of this section applies, sec-
tion 6050P requires C’s clients to report the $850,000
of discharges of the accounts receivable of which C
did not become the owner.
(i)Effective date. This section applies
to discharges of indebtedness occurring on
or after January 1, 2005.
PART 602—OMB CONTROL
NUMBERS UNDER THE PAPERWORK
REDUCTION ACT
Par. 5. The authority citation for part
602 continues to read as follows:
Authority: 26 U.S.C. 7805.
Par. 6. In §602.101, paragraph (b) is
amended by removing two entries from the
table as follows:
§602.101 OMB Control numbers.
*****
(b) * * *
CFR part or section where
identified and described
Current OMB
Control No.
*****
1.6050P–1........................................................... 1545–1419
1.6050–1T........................................................... 1545–1419
*****
Mark E. Matthews,
Deputy Commissioner for
Services and Enforcement.
Approved October 19, 2004.
Gregory F. Jenner,
Acting Assistant Secretary of the Treasury.
(Filed by the Office of the Federal Register on October 22,
2004, 8:45 a.m., and published in the issue of the Federal
Register for October 25, 2004, 69 F.R. 55000)
Section 7520.—Valuation
Tables
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
Section 7872.—Treatment
of Loans With Below-Market
Interest Rates
The adjusted applicable federal short-term, mid-
term, and long-term rates are set forth for the month
of November 2004. See Rev. Rul. 2004-102, page
784.
November 8, 20047922004–45 I.R.B.

Part III. Administrative, Procedural, and Miscellaneous
Information Reporting and
Other Guidance Regarding
Distributions With Respect to
Securities Issued by Foreign
Corporations
Notice 2004–71
SECTION 1. OVERVIEW
The Jobs and Growth Tax Relief Rec-
onciliation Act of 2003 (P.L. 108–27, 117
Stat. 752) (the “2003 Act”) was enacted
on May 28, 2003. Subject to certain lim-
itations, the 2003 Act generally provides
thatadividendpaidtoanindividualshare-
holder from either a domestic corporation
or a “qualified foreign corporation” is sub-
ject to tax at the reduced rates applica-
ble to certain capital gains. A qualified
foreign corporation includes certain for-
eign corporations that are eligible for ben-
efits of a comprehensive income tax treaty
with the United States which the Secretary
determines is satisfactory for purposes of
this provision and which includes an ex-
change of information program. In addi-
tion, a foreign corporation not otherwise
treated as a qualifiedforeign corporation
is so treated with respect to any dividend
it pays if the stock with respect to which
it pays such dividend is readily tradable
on an established securities market in the
United States.
This notice provides guidance for per-
sons required to make returns and provide
statements under section 6042 of the Inter-
nal Revenue Code regarding distributions
with respect to securities issued by a for-
eign corporation, and for individuals re-
ceiving such statements. This notice pro-
vides generally that the simplified proce-
dures and other rules contained in Notice
2003–79 are extended to apply for 2004
information reporting of distributions with
respect to securities issued by foreign cor-
porations.
SECTION 2. NOTICE 2003–79
In November of 2003, the Treasury
Department and the IRS issued Notice
2003–79, 2003–50 I.R.B. 1206, which
provided guidance for persons required to
make returns and provide statements under
section 6042 of the Internal Revenue Code
(e.g., Form 1099–DIV) regarding distri-
butions with respect to securities issued
by a foreign corporation, and for individ-
uals receiving such statements. Notice
2003–79 identified a series of separate
determinations that must be made in order
to determine whether a distribution with
respect to a security issued by a foreign
corporation is eligible for the reduced rates
of tax under the 2003 Act. Notice 2003–79
provided simplified procedures to be used
for 2003 information reporting of a dis-
tribution with respect to such a security.
Notice 2003–79 alsoprovided guidance
regarding the determination as to whether
a security (or an American depositary re-
ceipt in respect of such security) issued
by a foreign corporation other than ordi-
nary or common stock (such as preferred
stock) is considered readily tradable on an
established securities market in the United
States for purposes of the 2003 Act.
In addition, Notice 2003–79 described
certification procedures the Treasury De-
partment and the IRS intend to develop
for use for information reporting in fu-
ture years of distributions with respect to
securities issued by foreign corporations.
Notice 2003–79 requested comments
on the proposed certification procedures
outlined, and several comments were re-
ceived.
S
ECTION 3. GUIDANCE FOR 2004
.01Generally.
After reviewing the comments received
and working further to develop proce-
dures as outlined in Notice 2003–79, the
Treasury Department and the IRS have
concluded that it is appropriate to issue
more detailed guidance setting forth the
specific procedures to be used for informa-
tionreportinginproposedforminorderto
provide interested parties an opportunity
to comment. In order to allow for the
issuance of proposed procedures and the
consideration of comments before such
procedures are finalized, the Treasury
Department and the IRS are extending to
2004 information reporting the simplified
procedures that were provided in Notice
2003–79 for 2003 information reporting.
Section 3.02 of this notice provides
guidance regarding whether a security
is readily tradable on an established se-
curities market in the United States for
purposes of section 1(h)(11). Section 3.03
summarizes guidance for 2004 informa-
tion reporting of a distribution with respect
to a security issued by a foreign corpora-
tion. Section 3.04 provides guidance for
2004 for recipients of Form 1099–DIV.
.02Readily Tradable.
Notice 2003–79 provided guidance for
2003 regarding whether certain securi-
ties other than common or ordinary stock
are considered readily tradable on an es-
tablished securities market in the United
States for purposes of section 1(h)(11).
Upon further review, the Treasury De-
partment and the IRS have concluded that
the guidance provided in Notice 2003–79
regarding this determination should be
extended to future years. Accordingly,
for 2004 and future years, a security (or
an American depositary receipt in respect
of such security) issued by a foreign cor-
poration that is other than ordinary or
common stock (such as preferred stock)
will be considered readily tradable on an
established securitiesmarket in the United
States for purposes of the 2003 Act if the
security is listed on a national securities
exchange that is registered under section
6 of the Securities Exchange Act of 1934
(15U.S.C.§78f)orontheNasdaqStock
Market as described in Notice 2003–71.
.03Persons Required to File Form
1099–DIV.
The rules for 2003 information report-
ing of a distribution with respect to a secu-
rity issued by a foreign corporation that are
described in detail in sections 3.01 through
3.07 of Notice 2003–79 will also apply for
2004 information reporting. Those rules
are outlined in the following summary. For
2004, a person required to make a return
under section 6042 shall report a distribu-
tion with respect to such a security in Box
1b of Form 1099–DIV as a qualified divi-
dend if:
1. either the security with respect to
which the distribution is made is a
commonoranordinaryshare,ora
public SEC filing contains a state-
ment that the security will be, should
2004–45 I.R.B.793November 8, 2004

be, or more likely than not will be
treated as equity rather than debt for
U.S. federal income tax purposes; and
2. either:
a. the security is considered “readily
tradable on an established securi-
ties market in the United States”;
1
b. the foreign corporation is or-
ganized in a possession of the
United States; or
c. the foreign corporation is orga-
nized in a country whose income
tax treaty with the United States
is comprehensive, is satisfactory
to the Secretary for purposes of
section 1(h)(11), and includes
an exchange of information pro-
gram,
2
and if the relevant treaty
contains a limitation on benefits
provision, the corporation’s com-
mon or ordinary stock is listed
on an exchange covered by that
limitation on benefits provision’s
public trading test, unless the per-
sonrequiredtofileaninforma-
tion return knows or has reason to
know that the corporation is not
eligible for benefits under that
treaty; and
3. thepersonrequiredtofileForm
1099–DIV does not know or have
reason to know that the foreign cor-
poration is or expects to be, in the
taxable year of the corporation in
which the dividend was paid, or was,
in the preceding taxable year, a for-
eign personal holding company (as
defined in section 552), a foreign
investment company (as defined in
section 1246(b)), or a passive foreign
investment company (as defined in
section 1297);
3
and
4. the person required to make a return
under section 6042 determines that the
owner of the distribution has satisfied
the holding period requirement of sec-
tion 1(h)(11) or it is impractical for
such person to make such determina-
tion.
The IRS will exercise its authority un-
der section 6724(a) of the Code to waive
penalties under sections 6721 and 6722
with respect to reporting of calendar year
2004 payments if persons required to file
Form 1099–DIV make a good faith ef-
fort to report payments consistent with the
rules summarized above and described in
detail in sections 3.01 through 3.06 of No-
tice 2003–79. A person required to make
a return under section 6042 may report a
distribution in Box 1b as a qualified divi-
dend even if the distribution does not sat-
isfy these simplified information reporting
procedures for 2004, subject to the applica-
ble penalty provisions, as described in de-
tail in section 3.07 of Notice 2003–79.
.04Recipients of Form 1099–DIV for
2004.
For taxable years beginning in 2004,
a recipient of Form 1099–DIV may treat
amounts reported in Box 1b as qualified
dividends, unless and to the extent the re-
cipient knows or has reason to know that
such amounts are not qualified dividends,
asdescribedindetailinsection3.08ofNo-
tice 2003–79.
SECTION 4. EXPECTED GUIDANCE
FOR FUTURE YEARS
The Treasury Department and the IRS
are developing detailed procedures for im-
plementing the certification approach for
information reporting outlined in section 5
of Notice 2003–79. The Treasury Depart-
ment and the IRS intend shortly to issue
guidance setting forth those detailed pro-
cedures in proposed form. This will pro-
vide interested parties an opportunity to
provide specific comments before the pro-
cedures are issued in final form to be ef-
fective for information reporting for future
years.
SECTION 5. EFFECTIVE DATE
This notice is effective for taxable years
beginning on or after January 1, 2004.
SECTION 6. PAPERWORK
REDUCTION ACT
The information collection referenced
in this notice has been previously reviewed
and approved by the Office of Manage-
ment and Budget as part of the promulga-
tion of Form 1099–DIV. See OMB Control
Number 1545–0110. This notice merely
provides additional guidance regarding the
proper filing of such returns and furnishing
of such statements.
An agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally tax returns and tax return
information are confidential, as required
by 26 U.S.C. § 6103.
SECTION 7. CONTACT
INFORMATION
The principal author of this notice is
Michelle L. Drumbl of the Office of As-
sociate Chief Counsel (International). For
further information regarding this notice,
contact Ms. Drumbl at (202) 622–3880
(not a toll-free call).
1
Notice 2003–71, 2003–43 I.R.B. 922, and section 3.02 of this notice provide guidance regarding when a security is considered readily tradable on an established securities market in the
United States for purposes of section 1(h)(11).
2
Notice 2003–69, 2003–42 I.R.B. 851, contains a list of qualifying treaties for this purpose.
3
Notice 2004–70, 2004–44 I.R.B. 724, provides guidance regarding the extent to whichdistributions, inclusions, and other amounts received by, or included in the income of, individual
shareholders as ordinary income from foreign corporations subject to certain anti-deferral regimes may be treated as qualified dividend income forpurposes of section 1(h)(11).
November 8, 20047942004–45 I.R.B.

NOTE:
Following is a list of related instructions and forms for filing Form 1042–S Electronically/Magnetically:
•Current Instructions for Form 1042–S
•Form 4419 — Application for Filing Information Returns Electronically/Magnetically
•Form 4804 — Transmittal of Information Returns Reported Magnetically
•Form 8508 — Request for Waiver From Filing Information Returns Magnetically
•Form 8809 — Application for Extension of Time To File Information Returns
•Notice 210 — Preparation Instructions for Media Labels
•Publication 515 —Withholding of Tax on Nonresident Aliensand Foreign Corporations (for general information and
explanation of tax law associated with Form 1042–S)
•Publication 901 — U.S. Tax Treaties
The Internal Revenue Service (IRS), Enterprise Computing Center at Martinsburg (ECC-MTB) encourages filers to make copies
of the blank forms in the back of this publication for future use. These forms can also be obtained by calling 1–800–TAX–FORM
(1–800–829–3676). You can also download forms and publications from the IRS Web Site atwww.irs.gov.
IMPORTANT NOTES:
IRS/ECC-MTB now offers an Internet connection ath
ttp://fire.irs.govfor electronic
filing. The FIRE System will be down from Dec. 23, 2004, through Jan. 4, 2005, for
upgrading. It is not operational during this time for submissions.
Beginning in Tax Year 2006, processing year 2007, IRS/ECC-MTB will no longer accept
3
1
/2-inch diskettes for filing information returns.
Rev. Proc. 2004–63
TABLE OF CONTENTS
Part A. General
SEC. 1. PURPOSE................................................................................................. 797
Sec. 2. Nature of Changes—Current Year (Tax Year2004)................................................................ 797
SEC. 3. WHERE TO FILE AND HOW TO CONTACT THE IRS, ENTERPRISE COMPUTING CENTER AT
MARTINSBURG
....................................................................................... 798
SEC. 4. FILING REQUIREMENTS.................................................................................. 799
SEC. 5. VENDOR LIST............................................................................................. 799
SEC. 6. FORM 4419, APPLICATION FOR FILING INFORMATION RETURNS
ELECTRONICALLY/MAGNETICALLY
.................................................................. 800
SEC. 7. TEST FILES............................................................................................... 801
SEC. 8. FILING OF INFORMATION RETURNS MAGNETICALLY AND RETENTION REQUIREMENTS.................... 801
SEC. 9. DUE DATES............................................................................................... 802
2004–45 I.R.B.795November 8, 2004

SEC. 10. PROCESSING OF INFORMATION RETURNS MAGNETICALLY AT IRS/ECC-MTB.............................. 802
SEC. 11. VALIDATION OF INFORMATION RETURNS AT IRS SERVICE CENTER....................................... 803
SEC. 12. COMMON SUBMISSION PROBLEMS....................................................................... 804
SEC. 13. VOIDED AND CORRECTED RETURNS..................................................................... 805
SEC. 14. TAXPAYER IDENTIFICATION NUMBER (TIN)............................................................... 807
SEC. 15. EFFECT ON PAPER RETURNS AND STATEMENTS TO RECIPIENTS.......................................... 807
SEC. 16. DEFINITION OF TERMS.................................................................................. 808
SEC. 17. STATE ABBREVIATIONS.................................................................................. 810
Part B. Electronic Filing Specifications
SEC. 1. GENERAL................................................................................................ 811
SEC. 2. ADVANTAGES OF FILING ELECTRONICALLY............................................................... 811
SEC. 3. ELECTRONIC FILING APPROVAL PROCEDURE............................................................. 812
SEC. 4. TEST FILES............................................................................................... 812
SEC. 5. ELECTRONIC SUBMISSIONS............................................................................... 812
SEC. 6. PIN REQUIREMENTS...................................................................................... 813
SEC. 7. ELECTRONIC FILING SPECIFICATIONS.................................................................... 813
SEC. 8. CONNECTING TO THE FIRE SYSTEM....................................................................... 813
SEC. 9. COMMON PROBLEMS AND QUESTIONS ASSOCIATED WITH ELECTRONIC FILING........................... 815
Part C. Magnetic Media Specifications
SEC. 1. GENERAL................................................................................................. 816
SEC. 2. TAPE CARTRIDGE SPECIFICATIONS....................................................................... 816
SEC. 3. 3
1
/2-INCH DISKETTE SPECIFICATIONS...................................................................... 816
SEC. 4. TRANSMITTER “T” RECORD............................................................................... 817
SEC. 5. WITHHOLDING AGENT “W” RECORD...................................................................... 819
SEC. 6. RECIPIENT “Q” RECORD.................................................................................. 822
SEC. 7. RECONCILIATION “C” RECORD........................................................................... 828
SEC. 8. END OF TRANSMISSION “F” RECORD...................................................................... 829
Part D. Extensions of Time and Waivers
SEC. 1. GENERAL — EXTENSIONS................................................................................. 830
SEC. 2. SPECIFICATIONS FOR ELECTRONIC FILING OR MAGNETIC MEDIA EXTENSIONS OF TIME.................. 831
SEC. 3. RECORD LAYOUT — EXTENSION OF TIME................................................................. 831
SEC. 4. EXTENSION OF TIME FOR RECIPIENT COPIES OF INFORMATION RETURNS................................. 832
SEC. 5. FORM 8508, REQUEST FOR WAIVER FROM FILING INFORMATION RETURNS
MAGNETICALLY
..................................................................................... 833
November 8, 20047962004–45 I.R.B.

Use this Revenue Procedure to prepare Tax Year2004and 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
This Revenue Procedure is not revised every year. Updates will beprinted as needed in the Internal Revenue Bulletin. General
Instructions for Form 1042–S are revised every year. Be sure to consult current instructions when preparing Form 1042–S.
Part A. General
Revenue Procedures are generally revised annually to reflect legislative and form changes. Comments concerning this Revenue
Procedure, or suggestions for making it more helpful, can be addressed to:
Internal Revenue Service
Enterprise Computing Center at Martinsburg
Attn: Information Reporting Program
230 Murall Drive
Kearneysville, WV 25430
Sec. 1. Purpose
.01The purpose of this Revenue Procedure is to provide the specifications for filing Form 1042–S with IRS electronically through
the FIRE (Filing Information Returns Electronically) System or magnetically, using IBM 3480, 3490, 3490E, 3590, 3590E compatible
tape cartridges or 3
1
/2-inch diskette. This Revenue Procedure must be used to prepare current and prior year information returnsfiled
beginning January 1, 2005, and received by IRS/ECC-MTB or postmarked by December 31, 2005.
.02Generally, the box names on the paper Form 1042–S correspond with the fields used to file electronically/magnetically; how-
ever, if discrepancies occur, the instructions in this Revenue Procedure govern.
.03This Revenue Procedure supersedes Rev. Proc. 2003–83 published as Publication 1187, Specifications for Filing Form 1042–S,
Foreign Person’s U.S. Source Income Subject to Withholding, Electronically or Magnetically.
.04Refer to Part A, Sec.16, for definitions of terms used in this publication.
.05Specifications for filing Forms W–2, Wage and Tax Statements, electronically/magnetically are available from the Social Secu-
rity Administration (SSA)only. Filers can call 1–800–SSA–6270 to obtain the phone number of the SSA Employer Service Liaison
Officer for their area.
.06IRS/ECC-MTB doesnotprocess Forms W–2. Paperand/ormagnetic media for Forms W–2 must be sent to SSA. IRS/ECC-
MTB does, however, process waiver requests (Form 8508) and extension of time to file requests (Form 8809) for Forms W–2 and
requests for an extension of time to provide the employee copies of Forms W–2.
.07The following Revenue Procedures and publications provide moredetailed filing procedures for certain information returns:
(a)2004 Instructions for Form 1042–S.
(b)Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 1042–S, 5498, and
W–2G.
(c)Publication 1239, Specifications for Filing Form 8027, Employer’s Annual Information Return of Tip Income and Allocated
Tips, Electronically or Magnetically.
(d)Publication 1220, Specifications for Filing Forms 1098, 1099, 5498, and W–2G, Electronically or Magnetically.
(e)Publication 1245, Specifications for Filing Form W–4, Employee’s Withholding Allowance Certificate, Electronically or
Magnetically.
Sec. 2. Nature of Changes—Current Year (Tax Year2004)
.01Part B, Electronic Filing Specifications, was completely revised. Please read carefully. We now offer an internet connection
ath
ttp://fire.irs.gov.
.02The following changes were made to the Transmitter ‘T’ Record:
(a)In position 199 a new field, Prior Year Data Indicator, was added.
(b)In positions 771–778 a new field, Record Sequence Number, was added.
2004–45 I.R.B.797November 8, 2004

.03The following changes were made to Withholding Agent ‘W’ Record:
(a)In position 13, Withholding Agent’s EIN Indicator, the indicators were renumbered and a new indicator for NQI-EIN was
added.
(b)In positions 771-778 a new field, Record Sequence Number, was added.
.04The following change was made to the Recipient ‘Q’ Record:
(a)In positions 771-778 a new field, Record Sequence Number, was added.
.05The following change was made to Reconciliation ‘C’ Record:
(a)In positions 771-778 a new field, Record Sequence Number, was added.
.06The following change was made to the End of Transmission ‘F’ Record:
(a)In positions 771–778 a new field, Record Sequence Number, was added.
.07Additional editorial changes of a clarifying nature have beenmade throughout this publication. Please read the entire publica-
tion carefully.
Sec.3.WhereToFileandHowtoContacttheIRS,Enterprise Computing Center at Martinsburg
.01All information returns filed electronically or magnetically are processed at IRS/ECC-MTB. Files containing information re-
turns and requests for IRS electronic filing and magnetic media information should be sent to the following address:
IRS–Enterprise Computing Center at Martinsburg
Attn: 1042–S Reporting
230 Murall Drive
Kearneysville, WV 25430
.02 Allrequests for an extension of time to file information returns with IRS/ECC-MTB or to the recipients, and requests for undue
hardship waivers filed on Form 8508, should be sent to the following address:
IRS–Enterprise Computing Center at Martinsburg
Information Reporting Program
Attn: Extension of Time Coordinator
240 Murall Drive
Kearneysville, WV 25430
.03The telephone numbers for electronic or magnetic media inquiry s
ubmissions are:
Information Reporting Program Customer Service Section
TOLL-FREE 1–866–455–7438 or
Outside the U.S. 304–263–8700
email atmccirp@irs.gov
304–267–3367 — TDD
(Telecommunication Device for the Deaf)
304–264–5602 — Fax Machine
Electronic Filing — FIRE System
h
ttp://fire.irs.gov
TO OBTAIN FORMS:
1–800–TAX–FORM (1–800–829–3676)
www.irs.gov — IRS Web Site access to forms
.04Current Instructions for Form 1042–S have been included in the Publication 1187 for your convenience. The Form 1042–T is
used only to transmit Copy A ofpaperForm 1042–S. If filing paper returns, follow the mailing instructions on Form 1042–T and
submit the paper returns to the Internal Revenue Service Center, Philadelphia, PA 19255.
.05Requests for paper Form 1042–S and publications relating to electronic/magnetic media filing should be made by calling the
IRS toll-free number1–800-TAX-FORM (1–800–829–3676)or via the IRS Web Site atwww.irs.gov.
November 8, 20047982004–45 I.R.B.

.06Questions pertaining to magnetic media filing of Forms W–2mustbe directed to the Social Security Administration (SSA).
Filers can call 1–800-SSA–6270 to obtain the phone number of the SSA Employer Service Liaison Officer for their area.
.07Filersshould notcontact IRS/ECC-MTB if they have received a penalty notice and need additional information or are request-
ing an abatement of the penalty. A penalty notice contains an IRSrepresentative’s name and/or phone number for contact purposes;
or, the filer may be instructed to respond in writing to the address provided. IRS/ECC-MTB doesnotissue penalty notices and does
nothave the authority to abate penalties. For penalty information, refer to the Penalty section of thecurrent Instructions for Form
1042–S.
.08A taxpayer or authorized representative may request a copy of a tax return, including Form W–2 filed with a return, by sub-
mitting Form 4506, Request for Copy or Transcript of Tax Form, to IRS. This form may be obtained by calling1–800-TAX-FORM
(1–800–829–3676). For any questions regarding this form, call 215–516–2000 and select option 1. This is not a toll-free number.
.09The Information Reporting Program Customer Service Section (IRP/CSS), located at IRS/ECC-MTB, answers electronic/mag-
netic 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 theelectronic/magnetic media fil-
ingof Form 1042–S. 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 em-
ployers nationwide, Monday through Friday, 8:30a.m. to 4:30 p.m. Eastern time, by calling toll-free1–866–455–7438or via email
atmccirp@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.Call as soon as questions arise to avoid the busy filing seasons at the end of January
and February. Recipients of information returns (payees) should continue to contact 1–800–829–1040 with any questions on how to
report the information returns data on their tax returns.
Note: The Customer Service Section does not answer tax law questions concerning the requirements for withholding of tax
on payments of U.S. source income to foreign persons under Chapter 3 of the Code. If you need such assistance, you may call
215–516–2000 and select option 1 (not a toll-free number) or write to: Philadelphia Internal Revenue Service, International
Section, P.O. Box 920, Bensalem, PA 19020–8518.
Sec. 4. Filing Requirements
.01The regulations under section 6011(e)(2)(A) of the Internal Revenue Code provide that any person, including a corporation,
partnership, individual, estate, and trust, who is required to file250 or more information returns must file such returns electroni-
cally/magnetically. Withholding agents who meet the threshold of 250 or more Forms 1042–S are required to submit their information
electronically or magnetically.
Note: Even though filers with less than 250 information returns are not required to submit the information returns elec-
tronically or magnetically and may submit them on paper, IRS encourages filers to transmit those information returns elec-
tronically or magnetically.
.02These requirements apply separately to both originals and corrections filed electronically/magnetically.
.03All 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 Qualified Intermediary Employer Identification Number (QI-EIN), Withholding Foreign Partnership Employer Identifica-
tion Number (WP-EIN), or Withholding Foreign Trust Employer Identification Number (WT-EIN)]. For example, if a corporation
with several branches or locations uses the same EIN, the corporation must aggregate the total volume of returns to be filed for that
EIN and apply the filing requirements to each type of return accordingly.
.04Filers who are required to submit their information returns on magnetic media may choose to submit their documents by elec-
tronic filing. IRS/ECC-MTB has one method for filinginformation returns electronically; see Part B.
.05The above requirements do not apply if the filer establishes hardship (see Part D, Sec. 5).
Sec. 5. Vendor List
.01IRS/ECC-MTB prepares a list of vendors who support electronic filing or magnetic media. The Vendor List (Pub. 1582) con-
tains the names of service bureaus that will produce files on the prescribed types of magnetic mediaor via electronic filing. It also
contains the names of vendors who provide software packages for filers who wish to produce electronic or magnetic media files on
their own computer systems. This list is compiled as a courtesyand in no way implies IRS/ECC-MTB approval or endorsement.
.02If filers meeting the filing requirementsengage a service bureau to prepare media ontheir behalf, the filers should be careful
not to report duplicate data, which may cause penalty notices to be generated.
.03The Vendor List, Publication 1582, is updated periodically. Themost recent revision will be available on the IRS website at
www.irs.gov.
2004–45 I.R.B.799November 8, 2004

.04A vendor who offers a software package and has the ability to produce magnetic media for customers, or has the capability to
electronically file information returns and would like to be included on the list, must submit a written request to IRS/ECC-MTB. The
request should include:
(a)Company name,
(b)Address (include city, state, and ZIP code),
(c)Telephone 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) of return(s)
Sec. 6. Form 4419, Application for Filing Information Returns Electronically/Magnetically
.01Transmitters are required to submit Form 4419, Application forFiling Information Returns Electronically/Magnetically, to
request authorization to file information returns with IRS/ECC-MTB. A single Form 4419 may be filed. IRS/ECC-MTB encourages
transmitters who file for multiple withholding agents or qualified intermediaries to submit one application and to use the assigned
Transmitter Control Code (TCC) for all. Please make sure you submit your electronic/magnetic files using the correct TCC.
EXCEPTIONS
An additional Form 4419 is required for filing each of the following types of returns:
Forms 1098, 1099, 5498, W–2G, 8027 and Questionable W–4.
FORMTITLEEXPLANATION
1098, 1099, 5498, W–2GVarious types of information returnsPayments subject to reporting
requirements under Code Section
6011(e)(2)(A), including interest,
dividends, royalties, pensions and
annuities, gambling winnings and
compensation for personal services.
8027Employer’s Annual Information Return
of Tip Income and Allocated Tips
Receipts from operations where tipping is
customary. Used by employers to report
employees’ tips or allocated tips.
Questionable W–4
(SeeNote)
Employee’s Withholding
Allowance Certificate
Forms received during the quarter from
employees still employed at the end of
the quarter who claim
(a)More than 10 withholding allowances,
or
(b)Exempt status and wages normally
would be more than $200 a week.
Note: Empl
oyers are not required to send other Forms W–4 unless notified to do so by the IRS.
.02Tape cartridge, diskette, and electronically-filed returns may not be submitted to IRS/ECC-MTB until the application has been
approved. Please read the instructions on the back of Form 4419 carefully. A Form 4419 is included in the Publication 1187 for the
filer’s use. This form may be photocopied. Additional forms may be obtained by calling1–800-TAX-FORM (1–800–829–3676).
The form is also available atwww.irs.gov.
.03Upon approval, a five-character alpha/numeric Transmitter Control Code (TCC) beginning with the digits“22”will be assigned
andincludedinanapprovalletter.TheTCCmustbe coded in the Transmitter “T” Record. If a transmitter uses more than one TCC
to file, each TCC must be reported on separate media orin separate transmissions if filing electronically.
.04When revisions occur, a Publication 1187 containing the currentRevenue Procedure, forms, and instructions will be sent to the
attention of the contact person indicated on Form 4419.
.05Ifanyof the information (name, TIN or address) on the Form 4419 changes, please notify IRS/ECC-MTB in writing so the
IRS/ECC-MTB database can be updated. However, a change in the method by which information returns are being submitted is not
information which needs to be updated (e.g., diskette to electronic). The transmitter should include the TCC in all correspondence.
November 8, 20048002004–45 I.R.B.

.06Form 4419 may be submitted anytime during the year; however, itmustbe submitted to IRS/ECC-MTB at least 30 days before
the due date of the return(s) for current year processing. This will allow IRS/ECC-MTB the minimum amount of time necessary
to process and respond to applications. In the event that computerequipment or software is not compatible with IRS/ECC-MTB, a
waiver may be requested to file returns on paper documents.
.07IRS/ECC-MTB encourages a transmitter who files for multiplewithholding agents to submit one application and to use the
assigned TCC for all withholding agents.
.08If a withholding agent’s files are prepared by a service bureau, it may not be necessary for the withholding agent to submit an
application to obtain a TCC. Some service bureaus will produce files, code their own TCC on the media, and send it to IRS/ECC-MTB
for the withholding agent. Other service bureaus will prepare magnetic media and return the media to the withholding agent for
submission to IRS/ECC-MTB. These servicebureaus may require the withholding agent toobtain a TCC to be coded in the Transmitter
“T” Record. Withholding agents should contact their service bureaus for further information.
.09Once a transmitter is approved to file electronically ormagnetically, it is not necessary to reapply each yearunless:
(a)The withholding agent has discontinued filing electronically or magnetically for two consecutive years; the withholding
agent’s TCC may have been reassigned by IRS/ECC-MTB. Withholding agents who are aware that the TCC assigned will
nolongerbeusedarerequestedtonotifyIRS/ECC-MTB so these numbers may be reassigned;or
(b)The withholding agent’s magnetic mediafiles were transmitted in the past by a service bureau using the service bureau’s
TCC, but now the withholding agent has computer equipment compatible with that of IRS/ECC-MTB and wishes to prepare
his or her own files. The withholding agent must request a TCC by filing Form 4419.
.10One Form 4419 may be submitted regardless of how many types of media or methods are used to file the return. Multiple
TCCs will only be issued to withholding agents with multiple TINs. Only one TCC will be issued per TIN unless the filer has checked
the application for the following forms in addition to the Form 1042–S: Forms 1098, 1099, 5498, W–2G, 8027, and/or Questionable
W–4. A separate TCC will beassigned for these forms.
.11Approval to file does not imply endorsementby IRS/ECC-MTB of any computer software or of the quality of tax preparation
services provided by a service bureau or software vendor.
Sec. 7. Test Files
.01IRS/ECC-MTB strongly encourages all electronic or magnetic media filers to submit a test. The test file must consist of a
sample of each type of record:
(a)Transmitter “T” Record
(b)Withholding Agent “W” Record
(c)Multiple Recipient “Q” Records(at least 20)
(d)Reconciliation “C” Record
(e)End of Transmission “F” Record
.02Use the Test Indicator“TEST”(upper case) in Field Positions 195–198 ofthe “T” Record to show this is a test file.
.03IRS/ECC-MTB will check the file to ensure it meets the specifications of this Revenue Procedure. For current filers, sending a
test file will provide the opportunity to ensuretheir software reflects all required programming changes. Filers are reminded that no
validity, consistency, or math error tests will be conducted.
.04Tests should be sent to IRS/ECC-MTB between November1 and December 15. Tests must be received at ECC-MTB by
December 15 in order to be processed.
.05For 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. Mark the “TEST” box in Block 1 on the form. Also, mark “TEST” on the external media
label.
.06IRS/ECC-MTB will send a letter of acknowledgment to indicate the test results for magnetic media with documentation iden-
tifying the fatal errors. Resubmissionof magnetic media test files must be received by IRS/ECC-MTB no later than December 15.
See Part B, Sec. 4.03 for information on electronic test results.
.07Magnetic media will not be returned to filers.
Note: Most validity, consistency and related math error checks within individual “Q” Records will no longer be conducted
as part of ECC-MTB’s testing procedures.
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.
.02IRS/ECC-MTB allows for the use of computer-generated substitutes for Form 4804. The substitutes must contain all informa-
tion requested on the original forms including the affidavit and signatureline. Photocopies are acceptable but an original signature is
2004–45 I.R.B.801November 8, 2004

required. When using computer-generated forms, be sure to mark very clearly which tax year is being reported. This will eliminate
phone communication from IRS/ECC-MTB to question the tax year.
.03Multiple types of media may be submitted in a shipment. However, submita separate Form 4804 for each type of media.
.04Current and prior year data may be submitted in the same shipment; however, each tax year must be on separate media, and a
separate Form 4804 must be prepared to clearly indicate each tax year.
.05Filers who have prepared their information returns in advance of the due date should submit this information to IRS/ECC-MTB
no earlier than January 1 of the year the return is due.
.06Do 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.
.07Form 4804 may be signed by the withholding agent or the transmitter, service bureau, paying agent, or disbursing agent (all
hereafter referred to as agent) on behalf of the payer. Failure to sign the affidavit on Form 4804 may delay processing or could
result in IRS/ECC-MTB requesting a replacement file. An agent may sign the Form 4804 if the agenthas the authority to sign the
affidavit under an agency agreement (eitheroral, written, or implied) that is valid under state law and adds the caption “FOR: (name
of withholding agent/payer).”
.08Although an authorized agent may sign the affidavit, the withholding agent is responsible for the accuracy of the Form 4804
and the returns filed. The withholding agent will be liable for tax and interest penalties for failure to comply with filing requirements.
.09A self-adhesive external media label, created by the filer, must be affixed to each piece of magnetic media. For instructions on
how to prepare an external media label, refer to Notice 210 in the forms section of this publication.
.10On the outside of the shipping container, affix or attach a label which reads“IRB Box
of”reflecting the
number of containers in the shipment. (Filers can create a label with this information or cut out one of the labels on the special label
page provided in this publication.) If there isonly one container, mark the outside as Box1of1. For multiple containers, include the
sequence (for example, Box 1 of 3, 2 of 3, 3 of 3).
.11When submitting magnetic files include the following:
(a)AsignedForm 4804;
(b)External media label (created by filer) affixed to magnetic media;
(c)IRB Box
ofoutside label.
.12IRS/ECC-MTB will not pay for or accept “Cash-on-Delivery” or “Charge to IRS” shipments of tax information that an indi-
vidual or organization is legally required to submit.
.13Withholding agents should retain a copy of the information returns filed with IRS or have the ability to reconstruct the data for
at least 3 years from the due date of the returns.
Sec. 9. Due Dates
.01The due dates for filing paper returns with IRS also apply to magnetic media. Filing of Form 1042–S is on a calendar year basis.
.02Form 1042–S filed magnetically must be submitted toIRS/ECC-MTB postmarked on or before March 15.
.03If any due date falls on a Saturday, Sunday, or legal holiday, the return or statement is considered timely if filed or furnished
on the next day that is not a Saturday, Sunday, or legal holiday.
.04Magnetic media returns postmarked by the United States PostalService (USPS) on or before March 15, and delivered by United
States mail to IRS/ECC-MTB after the due date, are treated as timely under the “timely mailing as timely filing” rule. Notice 97–26,
1997–1 C.B. 413, provides rules for determining the date that is treated as the postmark date. A similar rule applies to items delivered
by private delivery services (PDSs) designated by the IRS. A PDS must be designated by the IRS before it will qualify for the timely
mailing rule. (SeeNote.) Notice 99–41, 1999–35 I.R.B. 325, provides the list of designated PDSs. Designation is effective until the
IRS issues a revised list. For items delivered by a non-designated PDS, the actual date of receipt by IRS/ECC-MTB 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/ECC-MTB willbe used as the filing date.
Note: Due to security regulations at ECC-MTB, the Internal Revenue police officers will only accept media from PDSs or
couriers from 7:00 a.m. to 5:00 p.m., Monday through Friday.
.05Statements to recipients must be mailed on or before March 15.
Sec. 10. Processing of Information Returns Magnetically at IRS/ECC-MTB
.01All data received at IRS/ECC-MTB for processing will be given the same protection as individual income tax returns (Form
1040). IRS/ECC-MTB will process the data and determine if the records are formatted and coded according to this Revenue Procedure.
.02 If the data is formatted incorrectly, IRS/ECC-MTB willrequest a replacement file inwriting. WhenIRS/ECC-MTB
requests a replacement file, it is because we encountered errors and were unable to process the media. Filers will receive a
November 8, 20048022004–45 I.R.B.

Media Tracking Slip (Form 9267)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.
•Areplacementis an information return file sent by the filerat the request of IRS/ECC-MTBbecause of errors encountered
while processing the filer’s original submission. After necessary changes have been made, the file must be resubmitted for
processing along with the Media Tracking Slip (Form 9267) which was included in the correspondence from IRS/ECC-MTB.
Filers should never send anything to IRS/ECC-MTB marked “Replacement” unless IRS/ECC-MTB has requested a replace-
ment file in writing or via the FIRE System.
.03All fields indicated as "Required" in the record layouts in Part Cmustcontain valid information. If information is not valid,
IRS/ECC-MTB will request a replacement file.For example: In the Recipient "Q" Record, position 2, Return Type Indicator, the only
valid characters are 0, 1, or 2. If any other characteris entered, a replacement file will be requested.
.04Magnetic media files must be corrected and returned with the Media Tracking Slip (Form 9267) to IRS/ECC-MTB within 45
days from the date of the letter. Refer to Part B, Section 6, for procedures for correcting files submitted electronically. A penalty for
failure to file correct information returns by the due date will beassessed if the files are not corrected and replaced within the 45 days
or if IRS/ECC-MTB requests replacement files more than two times.A penalty for intentional disregard of the filing requirements
will be assessed if a replacement file is not received. (For penalty information, refer to the Penalty section of the current Instructions
for Form 1042–S.)
.05A letter identifying errors encountered willbe provided. It is the responsibility of the transmitter tocheck the entire replacement
file for errors before resubmitting.
.06IRS/ECC-MTB will not return magnetic media. Therefore, if the transmitter wants proof that IRS/ECC-MTB received a ship-
ment, the transmitter should select a service with trackingcapabilities or one that willprovide proof of delivery.
.07IRS/ECC-MTBwillworkwithfilersasmuchaspossible to assist with processing problems.
Sec. 11. Validation of Information Returns at IRS Service Center
.01The accuracy of data reported on Form 1042–S will now be reviewed and validated at the IRS Service Center. All fields
indicated as“Required”in the record layouts in Part Cm
ustcontainvalid information. If the Service identifies an error, you will
be notified and required to provide correct information.
.02 Know your recipient!
.03The tax rate entered must be a valid tax rate based on the Internal Revenue Code or on a valid treaty article. The valid treaty
rate is based on the recipient’s country of residence for tax purposes. The rate selected must be justified by the appropriate treaty. A
valid Tax Rate Table can be found in the Instructions for Form 1042–S.
.04The Gross Income amount field must reflect pretax income. The Gross Income amount is the total income paid before any
deduction of tax at source.
.05If a qualified intermediary, withholding foreign partnership, or withholding foreign trust is acting as such, either as a withhold-
ing agent or as a recipient, the TIN reported must be a QI-EIN, WP-EIN, or WT-EIN and must begin with “98”. See definition of QI
in the Instructions for Form 1042–S.
.06Country Codes used must be valid codes taken from the Country Code Table. Generally, the use of “OC” or “UC” will generate
an error condition. If a recipient is claiming treaty benefits, the Country Code can never be “OC” or “UC”.
.07If a recipient is an “Unknown Recipient” or “Withholding RatePool”, no address should be present. These are the only two
situations where a street address is not required.
.08A U.S. TIN for a recipient is now generally required, particularly for most treaty benefits. The exceptions are very limited and
are listed in the current Instructions for Form 1042–S.
.09Apply the following formula to determine U.S. Federal Tax Withheld (field positions 48–59 of the “Q” Record). All field
positions described below are in the “Q” Record.
2004–45 I.R.B.803November 8, 2004

IncomeCodes(15–19)AllotherIncomeCodes
Gross Income Paid (6–17)Gross Income Paid (6–17)
Withholding Allowance (18–29)X Tax Rate (42–45)
= Net Income Amount (30–41)= U.S. Federal Tax Withheld (48–59)
X Tax Rate (42–45)
= U.S. Federal Tax Withheld (48–59)
.10If the Recipient Code is 20 (Unknown Recipient), the tax ratem
ustbe 30%.
.11When making a payment to an international organization (e.g., United Nations) or a tax-exempt organization under IRC 501(a),
use Country Code “OC”. Use “UC” only when you have an “Unknown Recipient”.
.12When using Exemption Code 4, the Recipient Country of Residence Code for Tax Purposes MUST be a VALID treaty country
(e.g., tax resident of Northern Ireland uses United Kingdom). Donot use Exemption Code 4 unless a reduction or exemption of tax
isbasedonatreatyclaim.
.13Generally, payments under Income Codes 06 and 08 are not exempt from withholding, however, certain exceptions apply. See
the current Instructions for Form 1042–S.
.14If income is from gambling winnings (Income Code 28) or is notspecified (Income Code 50), the tax rate must generally be
30%. This type of income is only exempt from withholding at source if the exemption is based on a tax treaty that has an “Other
Income” article.
.15If Income Code 20 (Earnings as Artist or Athlete) is used, the Recipient Code must be 09. Do not use Recipient Code 01
(Individual), 02 (Corporation), or 03 (Partnership). Generally, the tax rate cannot be reduced even if a treaty may apply.
.16When paying scholarship and fellowship grants (Income Code 15), the Recipient’s Country of Residence for Tax Purposes
must be identified and cannot be “OC” or “UC”. Grants that are exempt under Code Section 117 are no longer required to be reported
on Form 1042–S.
Note: Grants that are exempt under Code 117 include only amounts provided for tuition, fees, books, and supplies to a
qualified student. Amounts provided for room and board can only be exempted under a tax treaty and must be reported on
Form 1042–S whether exempt from tax or not.
.17If a student is receiving compensation (Income Code 19) or a teacher or a researcher isreceiving compensation (Income Code
18), all or part of which is exempted from tax under a tax treaty, the Country of Residence for Tax Purposes must be identified and
cannot be “OC” or “UC”.
Sec. 12. Common Submission Problems
.01Publication 1187 is a format document,nota tax law document. Therefore, this publication cannot provide for all possible
reporting situations. For any given record entry, it is the responsibility of the filer to make sure that the relevant tax law is applied to
the record entry being made.
1. Incorrect TIN indicator in the “W” Record
Be careful that the correct TIN Indicator is used. A U.S. withholding agent always has an EIN. Only a foreign withholding agent
that has entered into a Qualified Intermediary agreement with the IRS can have a QI-EIN. If the withholding agent is a foreign
company, then a foreign address must be entered in the withholding agent address fields.
2. Blank or invalid information in the Withholding Agent’s name and address fields
The IRS error correction process requires that the “W” Recordbe checked for validity before the “Q” Record can be corrected.
Please ensure that the withholding agent’s Name, EIN, Street Address, City and State or Country is present along with the
appropriate Postal or ZIP Code. Withholding Agent’s Name Line-1mustcontain the withholding agent’s name.
3. Missing Recipient TIN in the “Q” Record
A Recipient TINmustbe present in order to allow a reduction or exemption from withholding at 30% tax rate. The only major
exceptions to this rule involve payments of portfolio interest, dividends, and certain royalty payments. If the recipient doesn’t have
a TIN, one must be applied for and provided to the withholding agent before a reduction or exemption of withholding is allowed.
November 8, 20048042004–45 I.R.B.

4. Invalid recipient name and address information
The recipient name entered in Recipient’s Name Line–1 must be the same name shown on the withholding certification document
provided to and retained by the withholding agent. Recipient’s Street Line–1 should only show the official street address. Use
Recipient’s Street Line–2 for additional internal distribution information such as mail stop numbers or attention information.
Follow the instructions for entry of foreign postal codes, cities and countries. Do not input all information in the City field.
Use the appropriate fields and codes.
5. Incorrect use of Recipient Code 20 (Unknown Recipient)
This Recipient Code may be usedonlyif no withholding certification document has been provided to and retained by the
withholding agent, or the withholding certification document provided to and retained has been determined by the withholding
agent to be incomplete or otherwise unreliable. If Recipient Code 20 is used, then Recipient Name Line–1 must contain the
words Unknown Recipient and the other name and address fields must be blank.
6. Incorrect use of Recipient Code 20 and the Tax Rate and U. S. Tax Withheld fields
If Recipient Code 20 is used, the Tax Rate and the U.S. Tax Withheld must always be 30%. Exemption Code 04 (treaty
exemption)CANNOT BE USED.
7. Incorrect use of Country Codes in the “Q” Record
There are 3 places in the “Q” Record where country information must be entered. Generally, the information entered in these three
fields should be consistent. The country list in the Instructions for Form 1042–S is comprehensive.Do notuse any code that isn’t
on the list. Read the instructions for Form 1042–S regarding the use of “OC” and “UC”.Do notuse these two codes under any
circumstance other than those specifically indicated in the Instructions for Form 1042–S.
8. Incorrect reporting of Tax Rates in the “Q” Record
A valid Tax Rate Table can be found in the Instructions for Form 1042–S. Please refer to table and only use the tax rates listed.
“Blended rates” are not allowed. If a tax rate for a given recipient changes during the year, two "Q" Records must be submitted.
9. Total amounts reported in the “C” Record do not equal the total amounts reported in the “Q” Records.
The total Gross Income and U.S. Tax Withheld reported in the “Q” Record must equal the total Gross Income and Total U.S.
Tax Withheld reported in the corresponding “C” Record.
.02Problems relating specificallyto filing Form 1042–S electronically can be found in Part B, Sec. 12.
Sec. 13. Voided and Corrected Returns
.01A corrected record must always have a corresponding voided record submitted prior to or in association with the corrected
record.
.02To provide clarification of the correction process for Form 1042–S, the following definitions have been provided:
(a)A void record is an information return (Form 1042–S) submitted by the transmitter to delete a previously filed incorrect
original return. A void record must be a duplicate of the original successfully processed return with the exception of a
Return Type Indicator of “1” (1 = Void) in field position 2 of the “W” and “Q” Records. The voided “Q” Record can be
filed with or without a corresponding correction record. For example, a Form 1042–S was submitted, and it should have
been prepared as a Form 1099. A “Q” Record with the original Form 1042–S information would be filed with a Return
Type Indicator of “1” (1 = Void) in field position 2. In thisinstance, a corresponding “Q”Record coded as a correction
would NOT be necessary and should not be submitted.
(b)A correction is an information return (Form 1042–S) submittedby the transmitter to correct a return that was successfully
processed by IRS/ECC-MTB, but contained erroneous information. A Return Type Indicator of “2” (2 = Corrected) in
field position 2 of the “W” and “Q” Records identifies a correction record.A corrected record must always have a
corresponding voided record submitted prior to or in association with the corrected record.
.03The magnetic media filing requirement of information returns of 250 or more applies separately to both original and corrected
returns.
2004–45 I.R.B.805November 8, 2004

E
X
A
M
P
L
E
If a withholding agent has 100 Forms1042–S to be corrected, they can befiled on paper because they fall
under the 250 threshold. However, if the withholding agent has 300 Forms 1042–S to be corrected, they
must be filed electronically or magnetically because they exceed the 250 threshold. If for some reason a
withholding agent cannot file the 300 corrections on magnetic media, 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
thesametypeofreturnwillbecoveredunderthiswaiver.
.04Corrections should be filedas soon as possible.Corrections filed after August 1 maybe subject to the maximum penalty of
$50 per return. Corrections filed by August 1 may be subject to a lesser penalty. For information on penalties, refer to the Penalty
section of the current Instructions for Form 1042–S. However, if awithholding agent discovers errors after August 1, the withholding
agent is still required to file corrections or be subject to a penalty for intentional disregard of the filing requirements. If a record is
incorrect, all fields on that record must be completed with the correct information. Submit corrections only for the returns filed in
error. Do not submit the entire file. Furnish corrected statements to recipients as soon as possible.
.05Corrected returns must be identified on the Form 4804 and the external media label by indicating “Correction”.
Note: Do not include original returns and corrected returns on the same media or in the same electronic file.
.06If filers discover that certain information returns were omitted on their original file, they mustnotcode these documents as
corrections. The file mustbecodedandsubmittedasanoriginalfile.
.07Prior year data, original and corrected,mustbe filed according to the requirements of this Revenue Procedure. If submitting
prior year corrections, use the record format for the current year and submit on separate media. However, use the actual year desig-
nation of the correction in Field Positions 2–5 of the “T” Record. If filing electronically, a separate transmission must be made for
each tax year.
.08In general, filers should submit corrections for returns filed within the last 3 calendar years.
.09All paper returns, whether original or corrected, must be filed with IRS Philadelphia Service Center.
.10Form 4804 must be submitted with corrected files submitted magnetically.
.11The “Q” Record provides a 20-position field (positions 72–91) for the recipient’s account number assigned by the withholding
agent. This number will help identify the appropriate incorrect return if more than one return is filed for a particular payee. This
number should appear on the initial return and on the corrected return in order to identify and process the correction properly.Do not
enter a TIN in this field.
.12The record sequence for filing correctionsisthesameasfororiginalreturns.
.13Following is a chart showing the steps to be taken for voiding and correcting Form 1042–S:
Guidelines for Filing Corrected Returns Electronically/Magnetically
Transaction 1: Identify incorrect returns (void process)
The record sequence for filing corrections is the same as for original returns. Create the file in the following order exactly the
same as the original transmission:
(a)Transmitter “T” Record
(b)Withholding Agent “W” Record with a Return TypeIndicator of “1” (1 = Void) in field position 2
(c)Recipient “Q” Record(s) with the exact information as submitted originally; however, place a Return Type
Indicator of “1” (1 = Void) in field position 2 of the “Q” Record (SeeNote)
(d)Prepare a Reconciliation “C” Record summarizing the preceding voided “Q” Records. (See sample format
below.)
Note: A voide
d “Q” Record may or may not have a corresponding corrected “Q” Record.
Transaction 2: Report the correctinformation (correction process)
If possible, on the same media or electronic submission prepare:
(a)Withhol
ding Agent “W” Record with a Return Type Indicator of “2” (2 = Corrected) in field position 2.
(b)Recipie
nt “Q” Record(s) with the correct information. Place a “2” (2 = Corrected) in field position 2 of the
“Q” Record.
(c)Prepare
a Reconciliation “C” Record summarizing the preceding corrected “Q” Records.
(d)Prepare
an End of Transmission “F” Record.
November 8, 20048062004–45 I.R.B.

Guidelines for Filing Corrected Returns Electronically/Magnetically
Note: Each corr
ected “Q” Record MUST have a corresponding voided“Q” Record submitted prior to or in association
with the corres
ponding correction record.
Sample data sequence for void/correction records submitted in the same file:
“T” Record
“W” Record coded for voided records
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“Q” Record coded as void
“C” Record to summarize voided records
“W” Record coded for corrected records
“Q” Record coded as corrected records
“Q” Record coded as corrected
“Q” Record coded as corrected
“C” Record to summarize corrected records
“F” Record
.14For information on when an amended Form 1042 is required, refer to Pub. 515, Withholding of Tax on Nonresident Aliens and
Foreign Entities.
Sec. 14. Taxpayer Identification Number (TIN)
.01Section 6109 of the Internal Revenue Code establishes the general requirements under which a person is required to furnish a
TIN to the person obligated to file the information return.
.02The Withholding Agent must provide its EIN, QI-EIN, WP-EIN or WT-EIN as appropriate, in the “W” Record and “T” Record
if the Withholding Agent is also the transmitter.
.03A recipient TIN (SSN, ITIN, EIN, QI-EIN, WP-EIN, or WT-EIN)) must be provided onevery “Q” Record when:
(a)Tax rate is less than 30% (See the current Instructions for Form 1042–S for exceptions)
(b)Income is effectively connected with the conduct of a trade or business in the United States
(c)Recipient claims tax treaty benefits (generally)
(d)Recipient is a Qualified Intermediary
(e)An NRA individual is claiming exemption from withholding on independent personal services
(f)Other situations may apply, see Publication 515
.04In the event the recipient does not have a TIN, the withholding agent should advise the recipient to take the necessary steps to
apply for one.
.05The recipient’s TIN and name combination are used to associate information returns reported to IRS/ECC-MTB with corre-
sponding information on recipients’ tax returns. It is imperative thatcorrectTaxpayer Identification Numbers (TINs) for recipients
be provided to IRS/ECC-MTB.Do not enter hyphens or alpha characters.Entering all zeros, ones, twos, etc., will have the effect
of an incorrect TIN.
.06The withholding agent and recipient names with associated TINs should be consistent with the names and TINs used on other
tax returns.
Note: A withholding agent must have a valid EIN, QI-EIN, WP-EIN, and/or WT-EIN. It is no longer valid for a withholding
agent to use SSNs and ITINs.
Sec. 15. Effect on Paper Returns and Statements to Recipients
.01Electronic/magnetic reporting of Form 1042–S eliminates the need to submit paper documents to the IRS.CAUTION: Do not
send Copy A of the paper forms to IRS for any forms filed electronically or on magnetic media.This will result in duplicate
filing.
.02Withholding agents are responsible for providing statements to the recipients as outlined in the current Instructions for Form
1042–S. Refer to those instructions for filing Form 1042–S on paper with the IRS and furnishing statements to recipients.
.03Statements to recipients should be clear and legible. If the official IRS form is not used, the filer must adhere to the specifications
and guidelines in Publication 1179, Rules and Specifications for Private Printing of Substitute Forms 1096, 1098, 1099, 1042–S, 5498,
and W–2G.
2004–45 I.R.B.807November 8, 2004

.04The address for filing paper Forms 1042–S and Form 1042 is: Internal Revenue Service Center, Philadelphia, PA 19255. Do
NOTsend paper Forms 1042–S or 1042 to IRS/ECC-MTB.
Sec. 16. Definition of Terms
ElementDescription
Beneficial OwnerThe beneficial owner of income is, generally, the person who is required under U.S.
tax principles to include the income in gross income on a tax return. For additional
information and special conditions see Definitions in the current Instructions for
Form 1042–S.
CorrectionA correction is an information return submitted by the transmitter to correct an
information return that was previously submitted to and processed by IRS/ECC-MTB,
but contained erroneous information. A corrected record must always have a
corresponding voided record submitted prior to or in association with the corrected
record.
Employer Identification
Number (EIN)
A nine-digit number assigned by IRS for Federal tax reporting purposes.
Electronic FilingSubmission of information returnselectronically via the internet. See Part B of this
publication for specific information on electronic filing.
FileFor purposes of this Revenue Procedure,a file consists of one Transmitter “T” Record
at the beginning of the file, a Withholding Agent “W” Record, followed by the
Recipient “Q” Record(s), a Reconciliation “C” Record summarizing the number
of preceding “Q” Records and total of preceding money fields. Follow with any
additional “W”, “Q”, and “C” Record sequences as needed. The last record on the file
will be the End of Transmission “F” Record. Nothing should be reported after the End
of Transmission “F” Record. A file format diagram is located at the end of Part D.
FilerPerson (may be withholding agent and/ortransmitter) submitting information returns
to IRS.
FIREFiling Information Returns Electronically (FIRE) System is the method for submitting
Forms 1042–S electronically toIRS/ECC-MTB. See Part B.
Filing YearThe calendar year in which the information returns are being submitted to IRS.
Flow-Through EntityA flow-throughentity is a foreign partnership (other than a withholding foreign
partnership) or a foreign simple or grantor trust (other than a withholding foreign
trust). For any payments for which a reduced rate of withholding under an income
tax treaty is claimed, any entity is considered to be a flow-through entity if it is
considered to be fiscally transparent under IRC Section 894 with respect to the
payment by an interest holder’s jurisdiction.
Foreign PersonA foreign person includes a nonresident alien individual, a foreign corporation,
a foreign partnership, a foreign trust, a foreign estate, and any other person that
is not a U.S. person. The term also includes a foreign branch or office of a U.S.
financial institution or U.S. clearing organization if the foreign branch is a Qualified
Intermediary. Generally, a payment to a U.S. branch of a foreign person is a payment
to a foreign person.
Gross IncomeGross income includes income from all sources, except certain items expressly
excluded by statute. Gross income is the starting point for computing adjusted gross
income and taxable income.
Individual Taxpayer Identification
Number (ITIN)
A nine-digit number issued by IRS to individuals who are required to have a U.S.
taxpayer identification number for tax purposes but are not eligible to obtain a social
security number (SSN). ITIN may be used for tax purposes only.
November 8, 20048082004–45 I.R.B.

ElementDescription
Information ReturnThe vehicle for withholding agents to submit required tax information about a
recipient to IRS. For this Revenue Procedure, it is information about a foreign
person’s U.S. source income subject to withholding, and the information return is
Form 1042–S.
IntermediaryAn intermediary is a person that acts as a custodian, broker, nominee, or otherwise as
an agent for another person, regardless of whether that other person is the beneficial
owner of the amount paid, a flow-through entity, or another intermediary.
Magnetic MediaFor this Revenue Procedure, the term magnetic media refers to IBM 3480, 3490,
3490E, 3590, or 3590E compatible tape cartridge; or 3
1
/2-inch diskette.
Media Tracking SlipForm 9267 accompanies correspondence sent by IRS/ECC-MTB requesting a
replacement file due to incorrect format or certain errors encountered when trying to
process the media.This form must be returnedwith the replacement file.
Nonqualified Intermediary (NQI)A Nonqualified Intermediary is a foreign intermediary that is not a U.S. person and
that is not a Qualified Intermediary.
PayerA payer is the person for whom the withholding agent acts as a paying agent pursuant
to an agreement whereby the withholdingagent agrees to withhold and report a
payment.
Presumption RulesThe presumption rules are thoserules prescribed under Chapter 3 and Chapter 61
of the Internal Revenue Code that a withholding agent must follow to determine
the status of a beneficial owner as a U.S. or foreign person when it cannot reliably
associate a payment with valid documentation.
Pro-Rata Basis ReportingIf the withholding agent has agreed that an NQI may provide information allocating
a payment to its account holders under the provisions of Regulations section
1.1441–1(e)(3)(iv)(D), and the NQI fails to allocate the payment in a withholding rate
pool to the specific recipients in the pool, the withholding agent must file a Form
1042–S for each recipient on a pro-rata basis.
Qualified Intermediary (QI)A Qualified Intermediary is a foreign intermediary that is a party to a withholding
agreement with the IRS, in which it agrees to comply with the relevant terms of
Chapters 3 and 61 of the Internal Revenue Code.
Qualified Intermediary Employer
Identification
A nine-digit number assigned by IRS to a QI for Federal tax reporting purposes. A
QI-EIN is only to be used when a QI is acting as a qualified intermediary.
RecipientPerson (nonresident alien individual, fiduciary, foreign partnership, foreign
corporation, Qualified Intermediary, Withholding Rate Pool, or other foreign entity)
that receives payments from a withholding agent as a beneficial owner or as a
qualified intermediary acting on behalf of a beneficial owner. A non-qualified
intermediary cannot be a recipient.
Replacement FileA replacement file is an information return file sent by the filerat the request of
IRS/ECC-MTBbecause of certain errorsencountered while processing the filer’s
original submission.
Service BureauPerson or organization with whom the withholding agent has a contract to prepare
and/or submit information return files to IRS/ECC-MTB. A parent company
submitting data for a subsidiary is not considered a service bureau.
Social Security Number (SSN)A nine-digit number assigned by Social Security Administration to an individual for
wage and tax reporting purposes.
Special CharacterAny character that isnota numeric, an alpha, or a blank.
Taxpayer Identification Number (TIN)Refers to either an Employer Identification Number (EIN), Social Security Number
(SSN), Individual Taxpayer Identification Number (ITIN), or a Qualified Intermediary
Employer Identification Number (QI-EIN).
Tax YearThe year in which payments were made by a withholding agent to a recipient.
2004–45 I.R.B.809November 8, 2004

ElementDescription
TransmitterRefers to the person or organization submitting file(s) electronically/magnetically.
The transmitter may be the payer, agent of the payer, or withholding agent.
Transmitter Control Code
(TCC)
A five-character alpha/numeric number assigned by IRS/ECC-MTB to the transmitter
prior to filing electronically or magnetically. An application Form 4419 must be
filed with IRS/ECC-MTB to receive this number. This number is inserted in the
Transmitter “T” Record (field positions 190–194) of the file andmustbe present
before the file can be processed. Transmitter Control Codes assigned to 1042–S filers
will always begin with“22”.
Unknown RecipientFor this Revenue Procedure, an unknown recipient is a recipient for which no
documentation has been received by a withholding agent or intermediary or for which
documentation received cannot be reliablyassociated. This includes incomplete
documentation. An unknown recipient is always subject to withholding at the
maximum applicable rate. No reduction of or exemption from tax may be applied
u
nderanycircumstances.
VendorVendors include service bureaus that produce information return files on the
prescribed types of magnetic media or via electronic filing for withholding agents.
Vendors also include companies that provide software for those who wish to produce
their own media or electronic files.
VoidA void record is used in the correction process of Form 1042–S. For purposes of
this Revenue Procedure, a void record is submitted by the transmitter to delete a
previously filed incorrect original Form 1042–S. A void record must be a duplicate
of the original successfully processed record with the exception of a “1” in field
position 2 of the “W” and “Q” Records.
Withholding AgentAny person, U.S. or foreign, thathas control, receipt, or custody of an amount subject
to withholding or who can disburse or make payments of an amount subject to
withholding. The withholding agent may be an individual, corporation, partnership,
trust, association, or any other entity. Theterm withholding agent also includes, but is
not limited to, a qualified intermediary, a nonqualified intermediary, a withholding
foreign partnership, a withholding foreign trust, a flow-through entity, a U.S. branch
of a foreign insurance company or foreign bank that is treated as a U.S. person, and an
authorized foreign agent. A person may be a withholding agent under U.S. law even
if there is no requirement to withhold from a payment or even if another person has
already withheld the required amount from a payment.
Withholding Foreign Partnership (WP)
or Withholding Foreign Trust (WT)
A foreign partnership or trust that has entered into a withholding or Withholding
Foreign Trust agreement with the IRS in which it agrees to assume primary
withholding responsibility for all payments that are made to it for its partners,
beneficiaries, or owners.
Sec. 17. 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.
StateCodeStateCodeStateCode
AlabamaALKansasKSNo. Mariana IslandsMP
AlaskaAKKentuckyKYOhioOH
American SamoaASLouisianaLAOklahomaOK
ArizonaAZMaineMEOregonOR
ArkansasARMarylandMDPennsylvaniaPA
CaliforniaCAMassachusettsMAPuerto RicoPR
ColoradoCOMichiganMIRhode IslandRI
ConnecticutCTMinnesotaMNSouth CarolinaSC
DelawareDEMississippiMSSouth DakotaSD
November 8, 20048102004–45 I.R.B.

StateCodeStateCodeStateCode
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
.02When reporting APO/FPO addresses use the following format:
EXAMPLE:
Payee NamePVT Willar
dJ.Doe
MailingAddressCompanyF,PSCBox100
167InfantryREGT
Payee CityAPO (or FPO)
Payee StateAE, AA, or AP*
Payee ZIP
Code
09801010
0
*AE is the designation for ZIPs beginning with 090–098, AA for ZIP 340, and AP for ZIPs 962–966.
Part B. Electronic Filing Specifications
Note: The FIRE System is now on the Internet athttp://fire.irs.gov.It is no longer a dial-up connection.
Sec. 1. General
.01Electronic filing of Form 1042–S (originals, corrections and replacement files) is offeredas an alternative to magnetic media
(tape cartridge or diskette) or paper filing. Filing electronically will fulfill the magnetic media requirements for those withholding
agents who are required to file magnetically. Withholding agents who are under the filing threshold requirement are encouraged to
file electronically. If the original file was sent magnetically, but IRS/ECC-MTB 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/ECC-MTB via the FIRE (Filing Information Returns Elec-
tronically) System. To connect to the FIRE System, point your browser toh
ttp://fire.irs.gov.The system is designed to support the
electronic filing of information returns only.
.03The electronic filing of information returns is not affiliated with any other IRS electronic filing programs. Filers must obtain
separate approval to participate in each of them. Only inquiries concerning electronic filing of information returns should be directed
to IRS/ECC-MTB.
.04Files submitted to IRS/ECC-MTB electronically must be in standard ASCII code. Do not send magnetic media or paper forms
with the same information as electronicallysubmitted files. This would create duplicate reporting resulting in penalty notices.
.05The record formats of the “T”, “W”, “Q”, “C”, and “F” records are the same for both electronically or magnetically filed
records. See Part C, 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)Security — Secure Socket Layer (SSL) 128-bit encryption.
(3)Results available within 20 workdays regarding the acceptability of the data transmitted. It is the filer’s responsibility to
log into the system and check results.
(4)Better customer service due to on-line availability of transmitter’s files for research purposes.
2004–45 I.R.B.811November 8, 2004

Sec. 3. Electronic Filing Approval Procedure
.01Filers must obtain, or already have, a Transmitter Control Code (TCC) assigned prior to submitting their files electronically.
(Filers who currently have a TCC for magnetic media filing of Form 1042–S, beginning with “22”, will not be assigned a second TCC
for electronic filing.) Refer to Part A, Sec. 6, for information on how to obtain a TCC.
.02Once a TCC is obtained, electronic filers assign their own userID, 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’s 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 who forget their password or PIN, can calltoll-free 1–866–455–7438for assistance. The FIRE System may require
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 Year2004(returns to be filed in2005), itmustbe
submitted to IRS/ECC-MTBno earlier thanNovember 1, 2004, andno later thanDecember 15, 2004.
.02Filers who encounter problems while transmitting the electronic test file can contact IRS/ECC-MTBtoll-free 1–866–455–7438
for assistance.
.03Filers must verify the status of the transmitted test data by going toh
ttp://fire.irs.govand verifying the status of their file by
clicking on CHECK FILE STATUS. This information will be available within 20 workdays after thetransmission is received by
IRS/ECC-MTB.
.04Form 4804 is not required for test files submitted electronically. See Part B, Sec. 6.
Sec. 5. Electronic Submissions
.01Electronically filed information may be submitted to IRS/ECC-MTB 24 hours a day, 7 days a week. Technical assistance w
ill
be available Monday through Friday between 8:30 a.m. and 4:30 p.m. Eastern time by calling ustoll-free 1–866–455–7438
.
.02 The FIRE System will be down from December 23, 2004, through January 4, 2005.This allows IRS/ECC-MTB to update
its system to reflect current year changes.
.03If you are sending files larger than 10,000 records electronically, data compression is encouraged. If you are cons
idering
sending files larger than 5 million records, please contact IRS/ECC-MTB for specifics. WinZip and PKZip are the only ac
ceptable
compression packages. IRS/ECC-MTB cannot accept self-extracting zip files or compressed files containing multiple
files. The time
required to transmit information returns electronically will vary depending upon the type of connection to the int
ernet and if data
compression is used.The time required to transmit a file can be reduced by as much as 95 percent by using compression.
.04Transmitters may create files using self assigned files name(s). Files submitted electronically will be assig
ned a new unique file
name by the FIRE System. The filename assigned by the FIRE System will consist of submission type (TEST, ORIG [origin
al], 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 22000, the IRS a
ssigned filename
would be ORIG.22000.0001.Record the filename.This information will be needed by ECC-MTB to identify the file, if a
ssistance
is required.
.05The 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 submit-
ted to and processed by IRS/ECC-MTB but contained erroneous information.(See Note.)
Note: Corrections should only be made to records that have been submitted incorrectly not the entire file.
•Areplacementis an information return file sent by the filer because the CHECK FILE STATUS option 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/ECC-MTB as a “Replacement” file unless the CHECK FILE STATUS
option on the FIRE System indicates the file is bad.
.06The TCC in the Transmitter “T” Record must be the TCC used to transmit the file; otherwise, the file will be considered an
error.
November 8, 20048122004–45 I.R.B.

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 an ORIGINAL, CORRECTION, or REPLACEMENT file is sent electronically and is permission
to release the file. It is not needed for a TEST file. An authorized agent may enter their PIN, however, the payer is responsible for the
accuracy of the returns. The payer will be liable for penalties for failure to comply with filing requirements. If you forget your PIN,
please calltoll-free 1–866–455–7438for assistance.
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 Questionable
W–4.
.02A transmitter must have a TCC (see Part A, Sec. 6) before a file can be transmitted. A TCC assigned for 1042–S magnetic
media filing should also be used for electronic filing.
.03The results of the electronic transmission will be available in the CHECK FILE STATUS area of the FIRE System within 20
business days. It is the filer’s responsibility to verify the acceptability of files submitted by selecting the CHECK FILE STATUS
option.
Sec. 8. Connecting to the FIRE System
.01Point your browser tohttp://fire.irs.govto connect to the FIRE System.
.02Before connecting, have your TCC and EIN available.
.03Your browser must support SSL 128-bit encryption.
.04Your browser must be set to receive “cookies”. Cookies are used to preserve your User ID status.
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 yourUser ID(most users logon with their first and last name).
Enter and verify yourpassword(the password is user assigned and must be 8 alpha/numerics,
containing at least 1 uppercase, 1 lowercase and1numeric).FIREmayrequireyoutochange
the password once a year.
Click“Create”.
If you receive the message“Account Created”,click“OK”.
Enter and verify your 10-digit self-assigned PIN (Personal Identification Number).
Click“Su
bmit”.
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 yourUser ID(most users logon with their first and last name).
Enter
yourpassword(the password is user assigned and is case sensitive).
2004–45 I.R.B.813November 8, 2004

UploadingyourfiletotheFIRESystem
At Menu Options:
Click“Send In
formation Returns”
Enter yourTCC:
Enter yourEIN:
Click“Submi
t”.
The system will then display the company name, address, city, state, ZIP code, phone number,
contact and email address. This information will be used to contact or send correspondence (if
necessary) regarding this transmission. Update as appropriate and/or Click“Accept”.
Click one of the following:
Original File
Correctio
n File
Test File
Replacement File(if you select this option, select one of the following):
NEW FIRE
Replacement(file was originally transmitted on this system)
Click th
e file to be replaced
Magnetic Media Replacement
Enter the alpha character from Form9267, Media Tracking Slip, that was
sent with the request for replacement file. Click“Submit”.
Enter your 10-digit PIN.
Click“Submit”.
Click“Browse”to locate the file and open it.
Click“Upload”.
When t
he upload is complete, the screen will display the total bytes received and tell you the name of the file you just
uploa
ded.
If you have more files to upload for that TCC:
Click“File Another?”;otherwise,
Click“Main Menu”.
It is your responsibility to check the acceptability of your file; therefore, be sure to check back into the system in 20
business days using the CHECK FILE STATUS option.
CheckingyourFILESTATUS
At the Main Menu:
Cl
ick“Check File Status”.
Enter yourTCC:
Enter yourEIN:
C
lick“Search”.
If “Results” indicate:
“
Good, Released”— File has been released to our mainline processing.
November 8, 20048142004–45 I.R.B.

CheckingyourFILESTATUS
“Bad”—Correc
t 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 f
inished, click onMain Menu.
Click“Log Out”
Close your Web Browser.
Sec. 9. Common Problems and Questions Associated with Electronic Filing
.01Refer to Part A, Sec. 12, Common Submission Problems, for common format errors.
.02The following are the major errors associated with electronic filing:
N
ON-FORMATERRORS
1. Transmitter does not check the FIRE System to determine file acceptability.
The results of your file transfer are posted to the FIRE System within 20 business days. It is your responsibility to verify file
acceptability and, if the file contains errors, you can get an online listing of theerrors. Date received and number of recipient
records are also displayed.
2. Transmitter uses the TCC assigned for filing 1098, 1099, 5498 or W-2G Forms.
Use your 1042-S TCC which begins with ‘22’ to transmit your 1042–S file, otherwise, it will be automatically considered an error.
3. Incorr
ect file is not replaced timely.
If we have advised you your file is bad, correct the file and timely resubmit as a replacement.
4. 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.
5. Transmitter sends a file and CHECK FILE STATUS indicates that the file is good, but the transmitter wants to send a
replacement or correction file to replace the original/correction/replacement file.
Once a file has been transmitted, you cannot send a replacement file unless CHECK FILE STATUS indicates the file is
bad (20 business days after file was transmitted). If youdo not want us to process the file, you must first contact ustoll-free
1–866–455–7438to see if this is a possibility.
6. Transmitter sends an original file that is good, and then sends a correction file for the entire file even though there are
only a few changes.
The correction file, containing the proper coding, should only contain the records needing correction not the entire file.
7. File is formatted as EBCDIC.
All files submitted electronicallymust be in standard ASCII code.
8. 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 theEIN 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.
9. Transmitter sent the wrong file, what should be done?
Call us as soon as possibletoll-free 1–866–455–7438. We may be able to stop the file before it has been processed.Please do not
send a replacement for a file that is marked as a good file.
2004–45 I.R.B.815November 8, 2004

Part C. Magnetic Media Specifications
Sec. 1. General
.01The specifications contained in this part of the Revenue Procedure define therequiredformat and contentof the records to be
included in the electronic/magnetic media file. Do not deviate from this format.
.02Transmitters must be consistent in the use of recording modes and density on files. If the media does not meet these specifica-
tions, IRS/ECC-MTB will request a replacement file. Filers are encouraged to submit a test prior to submitting the actual file. Contact
IRS/ECC-MTB for further informationtoll-free 1–866–455–7438.
.03Regardless of the type of media used or if returns are filed electronically, the recordlength must be 780 positions.
Sec. 2. Tape Cartridge Specifications
.01In most instances, IRS/ECC-MTB can process tape cartridges that meet the following specifications:
(a)Must be IBM 3480, 3490, 3490E, 3590, or 3590E compatible.
(b)Must meet American National Standard Institute (ANSI)standards and have the following characteristics:
(1)Tape cartridges will be
1
/2-inch tape contained in plastic cartridges which are approximately 4-inches by 5-inches by
1-inch in dimension.
(2)Magnetic tape will be chromium dioxide particle based
1
/2-inch tape.
(3)Cartridges must be 18-track, 36-track, 128-track, or 256-track parallel (SeeNote).
(4)Cartridges will contain 37,871 CPIor 75,742 CPI (characters per inch).
(5)Mode will be full function.
(6)The data may be compressed using EDRC (Memorex) or IDRC (IBM) compression.
(7)Either EBCDIC (Extended Binary Coded Decimal Interchange Code) or ASCII (American Standard Coded Information
Interchange) may be used.
.02The tape cartridge records definedin this Revenue Procedure may be blocked subject to the following:
(a)Ablockmust notexceed 23,400 tape positions.
(b)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 theblock 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). Theblock length must be evenly divisible by 780.
(c) Records may not span blocks.
.03Tape cartridges may be labeled or unlabeled.
.04For the purposes of this Revenue Procedure, the following must be used:
Tape Mark:
(a)Signifies the physical end of the recording on tape.
(b)For even parity, use BCD configuration 001111 (8421).
(c)May follow the header label and precede and/or follow the trailer label.
Note: Filers should indicate on the external media label and transmittal Form 4804 whether the cartridge is 18-track,
36-track, 128-track or 256-track.
Sec. 3. 3
1
/2-Inch Diskette Specifications
.01To be compatible, a diskette file mustmeet the following specifications:
(a)3
1
/2-inches in diameter.
(b)Data must be recorded in standard ASCII code.
(c)Records must be a fixed length of 780 bytes per record.
(d)Delimiter character commas (,) must not be used.
(e)Positions 779 and 780 of each record have been reserved for use as carriage return/line feed (cr/lf) characters, if applicable.
(f)Filename of 1042TAX must be used. Do not enter any other data in this field. If a file will consist of more than one diskette,
the filename 1042TAX will contain a three-digit extension. This extension will indicate the sequence of the diskettes within
the file. For example, if the file consists of three diskettes, the first diskette will be named 1042TAX.001, the second will
be 1042TAX.002, and the third will be 1042TAX.003. The first diskette, 1042TAX.001, will begin with a “T” Record and
the third diskette, 1042TAX.003, will have an “F” Record at the end of the file.
(g)A diskette will not contain multiple files as defined in Part A, Sec. 16. A file may have only ONE Transmitter “T” Record.
(h)Failure to comply with instructions will resultin IRS/ECC-MTB requesting a replacement file.
(i)Diskettes must meet one of the following specifications:
November 8, 20048162004–45 I.R.B.

CapacityTracksSides/DensitySectorSize
1.44 mb96tpihd512
1.44 mb135tpihd512
.02IRS/ECC-MTB encourages transmitters to use blank or currently formatted diskettes when preparing files. If extraneous data
follows the End of Transmission “F” Record, IRS/ECC-MTB will request a replacement file.
.03IRS/ECC-MTB willonlyaccept 3
1
/2-inch diskettes created using MS-DOS.
Notes: IRS no longer has the capability to process non-MS-DOS compatible diskettes. 3
1
/2-inch diskettes created on a
System 36 or AS400 are n
otacceptable.
.04Transmitters should check diskettes for viruses before submitting it to IRS/ECC-MTB.
Sec. 4. Transmitter “T” Record
.01This record identifies the entity preparing and transmitting the file. The transmitter and the withholding agent may be the same,
but they need not be.
.02ThefirstrecordofafileMUSTbe a Transmitter “T” Record (preceded only byheader labels). The “T” Record must appear
on each tape and cartridge; otherwise a replacement file may be requested.
.03The “T” Record is a fixed length of 780 positions.
.04All alpha characters entered in the “T” Record must be upper case.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance with these instructions, IRS will contact you to request correct
information. For those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter
blanks or zeroes in the indicated media position(s) and for the indicated length. All records have afixedlengthof780positions.
Note 2: A copy of the current Instructions for Form 1042–S forthis revision of the Publication 1187 is included at the end
of this publication. These instructions should be used for the proper coding of each field in this record where applicable. The
instructions are updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most
current instructions.
Record Name: Transmitter “T” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“T.”
2–5Tax Year4Required.Enter year for which income and withholding are being reported.
6–14Transmitter’s
Taxpayer
Identification
Number (TIN)
9Required.Enter the Taxpayer Identification Number of the Transmitter. This can
be a Social Security Number (SSN), Individual Taxpayer Identification Number
(ITIN), Employer Identification Number (EIN) or Qualified Intermediary Number
(QI-EIN).DO NOT ENTER blanks, hyphens or alpha characters.ATIN
consisting of all the same digits (e.g., 111111111) is not acceptable.
15–54Transmitter’s Name 40Required.Enter name of transmitter of file. Abbreviate if necessary to fit
40-character limit. Omit punctuation ifpossible. Left-justify and blank fill.
Note: Do n
ot use special characters in names or addresses that are unique to a language other than English. For
example:
å = A, æ = A,ü=U,Ø=O,ň=N,etc.
55–94Transmitter’s
Address
40Required.Enter full mailing address of the transmitter. This will include number,
street, and apartment or suite number (P.O. Box can be used if mail is not delivered
to street address). Abbreviate as needed tofit 40-character limit. Omit punctuation
if possible. Left-justify and blank fill.
2004–45 I.R.B.817November 8, 2004

Record Name: Transmitter “T” Record
Field
Positions Field TitleLength Description and Remarks
95–114City20Required.Enter the city or town (or other locality name) of transmitter. If
applicable, enter APO or FPO only. Left-justify and blank fill.
115–116 State Code2Required if U.S. Transmitter.Enter only the two-alpha State Code. DO NOT
spell out the state name. See State Code Table, Part A, Sec. 17.
117–118 Province Code2Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code table.DO NOT spell out
the Province Name. If foreign country other than Canada, blank fill.
Province CodeProvince
ABAlberta
BCBritish Columbia
LBLabrador
MBManitoba
NBNew Brunswick
NFNewfoundland
NSNova Scotia
NTNorthwest Territories
NUNunavut
ONOntario
PEPrince Edward Island
QCQuebec
SKSaskatchewan
YKYukon Territory
119–120 Country Code2Required if Foreign Transmitter. If Country Code is present, State Code field
MUST be blank.Enter only the two-alpha Country Code from the Country Code
table.DO NOT spell out the Country Name.
Note 1: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes
all internationally recognized country codes and must be used to ensure the proper coding of the Country Code field. This
list is updated each year as required. Do not enter U.S. in the Country Code field.
121–129 Postal or ZIP Code 9Required if U.S. address. Enter up to nine numeric characters for all U.S.
addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses.Enter the alpha/numeric foreign postal code.
Left-justify and blank fill the remaining positions. DO NOT use hyphens.
130–169 Contact’s Name40Required.Enter the name of the person to contact if any questions should arise
with the transmission.
170–189 Contact’s
Telephone Number
20Required.Enter the contact person’s telephone number, and extension, if
applicable. If foreign, provide appropriate codes for overseas calls. Left-justify.
190–194 Transmitter Control
Code (TCC)
5Required.Enter the five-character alpha/numeric TCC assigned ONLY for Form
1042–S reporting. (The first two numbers will always be22).
195–198 Test Indicator4Requiredifthisisatestfile.Enter the word “TEST”. Otherwise enter blanks.
199Prior Year
Indicator
1
Req
uired.Enter a “P” only if reporting prior year data; otherwise, enter blank.
Do
not enter a “P” for current year information.
200–770 Reserved571Blank fill.
November 8, 20048182004–45 I.R.B.

Record Name: Transmitter “T” Record
Field
Positions Field TitleLength Description and Remarks
771–778 Record Sequence
Number
8
Required.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
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779-780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
Transmitt
er “T” Record Layout
Record
Type
Tax
Year
Transmitter’s
TIN
Transmitter’s
Name
Transmitter’s
Address
CityState Code Province
Code
12–56–1415–5455–9495–114115–116117–118
Country
Code
Postal
or
ZIP
Code
Contact’
s
Name
Contact’
s
Telephon
e
Number
TCCTest
Indicato
r
Prior Yea
r
Indicat
or
Reserved Record
Sequenc
e
Number
Blank or
Carriag
e
Return
Line Fee
d
119–120 121–129 130–169170–189190–194 195–198199200–770 771–778779–780
Sec. 5. Withholding Agent “W” Record
.01The “W” Record identifies the Withholding Agent.
.02Enter a “W” Record after the initial “T” Record on the file, followed by the Recipient “Q” Records, and a Reconciliation “C”
Record.Donotreport for a withholding agent if there are no corresponding Recipient “Q” records.
.03Several “W” Records for different Withholding Agents may appear on the same Transmitter’s File.
.04Each “W” Record is a fixed length of 780 positions.
.05All alpha characters entered in the “W” Record must be upper case.
Note 1: For all fields marked “Required”, the transmitter mustprovide the information described under Description and
Remarks. If required fields are not completed in accordance withthese instructions, your file may not process correctly. For
those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter blanks or zeroes in
the indicated media position(s) and for the indicated length. All records have a fixed length of 780 positions.
Note 2: A copy of the current Instructions for Form 1042–S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The list
of country codes in the instructions includes all recognized country codes andMUST be used for coding. The instructions are
updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most current instructions.
2004–45 I.R.B.819November 8, 2004

Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“W”.
2ReturnType
Indicator
1Required.Enter the one position value below to identify whether the record is
Original, Void or Corrected. Do notenter a blank or alpha character.
Acceptable Values are:
• 0 (Zero) = Original
•1=Void
• 2= Corrected
3ProRataBasis
Reporting
1Required.Enter the one position value below to identify if reporting on a Pro
Rata Basis.
Acceptable Values are:
• 0 (Zero) = Not Pro Rata
• 1= Pro Rata Basis Reporting
4–12Withholding
Agent’s EIN
9Required.Enter the nine-digit Employer Identification Number of the Withholding
Agent. DoNOTenter blanks, hyphens or alpha characters. An EIN consisting of
all the same digits (e.g., 111111111) is not acceptable. DoNOTenter the recipient’s
TIN in this field.
Note: See current Instructions for Form 1042–S to determine when a Qualified Intermediary, Withholding Foreign
Partnership, or Withholding Foreign Trust must provide its QI-EIN, WP-EIN or WT-EIN in this field.
13Withholding
Agent’s EIN
Indicator
1Required.Enter the Withholding Agent’s EIN indicator from the following values:
•0(Zero
)
=EIN
• 1= QI-EIN, WP-EIN, WT-EIN
• 2= NQI-EIN
Note: Use EIN indicator 2 only if the Withholding Agent’s EIN begins with “98” ANDthe Withholding Agent’s City,
State and Country Code fields indicate that the Withholding Agent is n
ota U.S. withholding agent.
14–53Withholding
Agent’s Name
Line-1
40Required.Enter the Withholding Agent’s Name as established when filing for the
EIN or QI-EIN which appears in positions4–12 of the “W” Record. Left-justify
and blank fill.
Note: Do not use special characters in names or addresses that are unique to a language other than English. For
example: å = A, æ = A,ü=U,Ø=O,ň=N,etc.
54–93Withholding
Agent’s Name
Line-2
40Enter supplementary withholding agent’s name information; otherwise enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Alsouse this line for “care of” or “via”. Valid
characters are alpha, numeric, blank, ampersand (&), hyphen (-), comma (,) and the
percent (%). The percent [% (used as “in care of”)] is valid in the first position only.
94–
133
Wit
hholding
Age
nt’s Name
Lin
e-3
40See
above.
134–173 Withholding
Agent’s Street
Line-1
40Required.Enter the mailing address of the withholding agent. Street address
should include number, street, and apartment or suite number (or P.O. Box if mail is
not delivered to street address). Abbreviate as needed. Left-justify and blank fill.
November 8, 20048202004–45 I.R.B.

Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
174–213 Withholding
Agent’s Street
Line-2
40Enter supplementary withholding agent street address information. Otherwise
blank fill.
214–253 Withholding
Agent’s City
40Required.Enter the city or town (or other locality name). Enter APO or FPO
only if applicable.Do notenter a foreign postal code in the city field. Left-justify
and blank fill.
254–255 Withholding
Agent’s State Code
2Required if Withholding Agent has a U.S. address.Enter the two-character State
Code abbreviation. If not a U.S. state, territory or APO/FPO identifiers, blank fill.
Do not use any of the two character Country Codes in the State Code Field.
Note 1: If the withholding agent has a U.S. address,leave the country code in positions 258–259 blank.
256–257 Withholding
Agent’s Province
Code
2Required if Foreign CountryCodeis“CA”(Canada).Enter only the two-alpha
character Province Code as shown in the Province Code Table. See “T” record
positions 117–118 for Province Code Table.DO NOT spell out the Province
Name. If foreign country other than Canada, blank fill.
258–259 Withholdi
ng
Agent’s Co
untry
Code
2Required i
f QI or NQI or other foreign withholding agent.Enter only the
two-alpha
Country Code from the Country Code Table.DO NOT spell out the
Country Na
me.
Note 1: COUNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes
all internationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field.
This list is updated each year as required. Do not enter U.S. in the Country Code field.
260–268 Postal or ZIP Code 9Required if U.S. address.Enter up to nine numeric characters for all U.S.
addresses (including territories, possessions and APO/FPO).
Conditional for foreign addresses.Enter the alpha/numeric foreign postal code.
DO NOT use hyphens or blanks within the Postal Code. Left-justify and blank fill
the remaining positions.
269–272 Tax Year4Required.Enter the four-digit year of the current tax year unless you entered a
“P” in the Prior Year Indicator Field of the “T” Record.All recipient “Q” Records
must report payments for this year only. Different tax years may not appear on
the same file.
273–292 Contact’s Phone
Number and
Extension
20Required.Enter the telephone number of a person to contact regarding electronic
or magnetic files. Omit hyphens. If no extension is available, left-justify and fill
unused positions with blanks. If foreign,provide appropriate codes for overseas
call.
293Final Return
Indicator
1Required.Enter the one position value below to indicate whether you will be
filing Forms 1042–S in the future.
• 0 (Zero) = will be filing
• 1= will not be filing
294–770 Reserved477Blank fill.
2004–45 I.R.B.821November 8, 2004

Record Name: Withholding Agent “W” Record
Field
Positions Field TitleLength Description and Remarks
771–778 Record Sequence
Number
8
Required.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
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed characters (CR/LF).
Withholding Agent “W” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Withholding
Agent’s EIN
Withholding
Agent’s EIN
Indicator
Withholding
Agent’s Name
Line-1
Withholding
Agent’s Name
Line-2
1234–121314–5354–93
Withholding
Agent’s
Name
Line-3
Withholding
Agent’s
Street
Line-1
Withholding
Agent’s
Street
Line-2
Withholding
Agent’s City
Withholding
Agent’s State
Code
Withholding
Agent’s
Province Code
Withholding
Agent’s
Country Code
94–133134–173174–213214–253254–255256–257258–259
Postal or ZIP
Code
Tax YearContact’s Phone
Number
and Extension
Final Return
Indicator
ReservedRecord
Sequence
Number
Blank or
Carriage
Return
Line Feed
260–268269–272273–292293294–770771–778779–780
Sec. 6. Recipient “Q” Record
.01The “Q” Record contains name and address information for the Recipient of Income, Non-Qualified Intermediary or Flow-
Through Entity if appropriate, Payer, and all data concerning the income paid and tax withheld that is required to be reported under
U.S. law. Each Recipient “Q” Record is treated as if it were a separate Form 1042–S.
.02Since the “Q” Record is restricted to one type of income and onetax rate, under certain circumstances it may be necessary to
submit more than one “Q” Record for the same recipient. Failure to provide multiple Recipient “Q” Records when necessary may
generate math computation errors during processing. This will result in IRS contacting you for correct information.
.03Following are some of the circumstances when more than one “Q” Record for a recipient would be required:
(a)Different types of income. For example, Recipient X derived income from Capital Gains (Income Code 09) and Industrial
Royalties (Income Code 10). A separate “Q” Record must be reported for each Income Code, providing Gross Income Paid
and U.S. Federal Tax Withheld pertaining to that Income Code.
(b)Change in Country Code during the year. For example, the Withholding Agent received notification via Form W–8BEN that
the recipient’s country of residence for tax purposes changed from country X to country Y.A separate “Q” Record must be
reported for each Country Code providing Gross Income Paid, Tax Rate, U.S. Federal Tax Withheld and Exemption Code,
if any. The amounts reported must be based on each country.
November 8, 20048222004–45 I.R.B.

(c)Change in a country’s tax treaty rate during the year. For example, effective April1, country X changes its tax treaty rate
from 10% to 20%. A separate “Q” Record must be reported foreach of the tax rates. Provide the Gross Income Paid, Tax
Rate, and U.S. Federal Tax Withheld under each tax rate.
.04All recipient “Q” Records for a particular Withholding Agent must be written after the corresponding Withholding Agent “W”
Record, followed by a Reconciliation“C” Record, and before the “W” Record for another Withholding Agent begins.
.05All alpha characters entered inthe “Q” Record must be upper case.
.06Report income and tax withheld in whole dollars only. Round up or down as appropriate.DO NOTenter cents.
Note 1: For all fields marked “Required”, the transmitter must provide the information described under Description and
Remarks. If required fields are not completed in accordance withthese instructions, IRS will contact you to request the correct
information. For those fields not marked “Required”, a transmitter must allow for the field, but may be instructed to enter
blanks or zeroes in the indicated media position(s) and for the indicated length. All records have afixedlengthof780positions.
Note 2: A copy of the current Instructions for Form 1042–S for this revision of the Publication 1187 is included at the end of
this publication. These instructions should be used for the proper coding of each field in this record where applicable. The list
of country codes in the instructions includes all recognized country codes andMUST be used for coding. The instructions are
updated each year as required.Since Publication 1187 may not be revised every year, be sure to use the most current instructions.
Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“Q”.
2ReturnType
Indicator
1Required.Enter the one position value below to identify whether the record
is Original, Void or Corrected. Must be the same value as in the “W” Record.
Values are:
• 0 (Zero) = Original
•1=Void
• 2= Corrected
3ProRataBasis
Reporting
1Required.Enter the one position value below to identify whether reporting Pro
Rata Basis. Must be the same value as in the "W" Record. Values are:
• 0 (Zero) = Not Pro Rata
• 1= Pro Rata Basis Reporting
4–5Income Code2Required.Enter the two-position value EXACTLY as it appears from the income
code table. The Income Code must accurately reflect the type of income paid.
DO NOTenter blanks or 00 (zeroes).
Note: Re
fer to the current Instructions forForm 1042–S for more information.
6–17Gross Income12Required.Enter the gross income amount in whole dollars only, rounding to the
nearest dollar (do not enter cents). For example report $600.75 as 000000000601.
An income amount of zero cannot be shown. Numeric only, right-justify and
zero fill.
Note: Do not report negative amounts in any amount field.
18–29Withholding
Allowance
12
Used wi
th Income Codes 15 through 19 ONLY.Enter the withholding allowance
amount
in whole dollars only, rounding to the nearest dollar (do not enter cents).
Numeri
c only, right-justify and zero fill. Otherwise enter blanks.
30–41Net Income12Required if Dollar Amount is Enteredin Withholding Allowance Field.Enter
the net income in whole dollars only, rounding to the nearest dollar (do not enter
cents). An amount other than zeromustbe shown. Numeric only, right-justify
and zero fill. Otherwise enter blanks.
2004–45 I.R.B.823November 8, 2004

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
42–45Tax Rate4Required.Enter the correct Tax Rate applicable to the income in gross income
field or net income field, as appropriate. Enter the Tax Rate as a 2-digit whole
number and 2-digit decimal (e.g., enter 39.6% as 3960, 15% as 1500 or 6% as
0600). See Note below.
Note: The correct Tax Rate must be entered, even if withholding was at a lesser rate. See the current Instructions
for Form 1042–S.
46–47Exemption Co
de
2Required. Re
ad Carefully.
•Ifthetaxrat
e entered is 0%, enter the appropriate exemption code “01” through
“09” from the
current Instructions for Form 1042–S.
•Ifthetaxrat
e entered is 1% through 30%, enter “00”.
•Ifthetaxrat
e entered is 31% or higher, blank fill.DO NOTenter “00”.
See the curren
t Instructions for Form 1042–S for circumstances under which
Exemption Cod
e“99”mustbeused.
Note: If an incorrect amount of tax was withheld, report the amount that was actually withheld and use the correct
tax rate in field positions 42–45.
48–59U.S. Tax Withheld 12Required.Enter the U.S. Federal tax withheld amount in whole dollars, rounding
to the nearest dollar (do not enter cents). For example, report $600.25 as
000000000600). Right-justify and zero fill.
60–71Amount Repaid12This field should be completedonlyif you repaid a recipient an amount that was
overwithheld and you are going to reimburse yourself by reducing, by the amount
of tax actually repaid, the amount of any deposit made for a payment period in the
calendar year following calendar year of withholding. Otherwise, enter blanks.
72–91Recipient’s
Account Number
20Enter the account number assigned by the withholding agent to the recipient.
Do notenter the recipient’s U.S. or foreign TIN. If account numbers are NOT
assigned, then blank fill. This field may contain numeric, alpha characters, blanks
or hyphens. Left-justify and blank fill.
92–93Recipient Code2Required.Enter the appropriate Recipient Code. Refer to the list of appropriate
codes in the current Instructions for Form 1042–S. No other codes or values are
valid.
Note: If r
ecipient code “20” is used, then Recipient’s Name Line-1 must be “Unknown” and Recipient’s Name
Lines 2 an
d 3 must be BLANK. The tax rate must be 30%.
94–133Recipient’s Name
Line-1
40Required.Provide the complete name of the recipient. If the recipient has a U.S.
TIN, enter the name as established when applying for the TIN. If recipient code
“20” is used then “UNKNOWN” must be entered and Recipient’s Name Lines 2
and 3 must be blank. See current Instructions for Form 1042–S for specifics on
“Unknown Recipient” and “Withholding Rate Pool”. Valid characters are alpha,
numeric, ampersand (&), hyphen (-), comma (,), or blank. Left-justify and blank fill.
Note 1: A Non-Qualified Intermediary (NQI) can NEVER be entered as the recipient.
Note 2:
Do not use special characters in names or addresses that are unique to a language other than English. For
exampl
e: å = A, æ = A,ü=U,Ø=O,ň=N,etc.
134–173 Recipient’s Name
Line-2
40Enter supplementary recipient name information including titles; otherwise enter
blanks. Use this line for additional names (e.g., partners or joint owners), for trade
names, stage names, aliases or titles. Also use this line for “care of”, “Attn.” or
“via”. Valid characters are alpha, numeric, blank, ampersand (&), hyphen (-),
comma (,), and the percent (%). The percent [% (use as “in care of”)] is valid in
the first position only.
174–213 Recipient’s Name
Line-3
40See above.
November 8, 20048242004–45 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
214–253 Recipient’s Street
Line-1
40Required.Enter the mailing address of the recipient. Street address should include
number, street, apartment, or suite number (or P.O. Box if mail is not delivered to
street address). Abbreviate as needed. Valid characters are alpha, numeric, blank,
ampersand (&), hyphen (-), comma (,), and the percent (%). Do not use street
address fields for “Attn” lines; use name line fields. Left-justify and blank fill.
254–293 Recipient’s Street
Line-2
40Enter supplementary recipient street address information. If a P.O. Box is used in
addition to a street address, enter it here; otherwise blank fill.
294–333 Recipient’s City40Required.Enter the city or town (or other locality name). Enter APO or FPO
only, if applicable. Do not enter a foreign postal code in the city field. Left-justify
and blank fill.
334–335 Recipient’s State2Required if U.S. address.Enter the two-character State Code abbreviation. If no
U.S. state, territory or APO/FPO identifier is applicable then blank fill.Do not use
any of the two character CountryCodes in the State Code Field.
Note: If the recipient has a U.S. address, leave the country code in positions 338–339 blank.
336–337 Recipient’
s
Province Co
de
2Required if
Foreign Country Code is “CA” (Canada).Enter only the two-alpha
character P
rovince Code as shown in the Province Code Table. See “T” record
positions
117–118 for Province Code Table.DO NOT spell out the Province
Name. If fo
reign country other than Canada, blank fill.
338–339 Recipient’s Country
Code
2Required if the recipient has a foreign address.Enter the two-character Country
Code abbreviation.
Note 1: If the state code is entered in positions 334–335, leave this field blank.
Note 2: CO
UNTRY CODES: The list of country codes provided in the current Instructions for Form 1042–S includes
all inter
nationally recognized country codes and MUST be used to ensure the proper coding of the Country Code field.
This list
is updated each year as required.
Note 3: Enter “UC” (unknown country) onlyif the payment is to an unknown recipient. If you are making a payment
to a QI or QI withholding rate pool, enter the country code of the QI.
340–348 Postal or ZIP Code 9Enter up to nine numeric characters for all U.S. addresses (including territories,
possessions and APO/FPO). For foreign addresses, enter the alpha/numeric foreign
postal code, if applicable. Enter this codein the left most position and blank fill the
remaining positions.DO NOTuse hyphens or blanks between numbers or letters
(e.g., if the postal code is written as A6B 3C5 input as A6B3C5). Left-justify.
349–357 Recipient’s U.S.
TIN
9Enter the recipient’s nine-digit U.S. Taxpayer Identification Number (TIN).DO
NOTenter hyphens or alpha characters. If TIN is not required under regulations,
blank fill.
Note: U.S. TINs are now required for most recipients. See current Instructions for Form 1042–S.
358Recipient’s U.S.
TIN Type
1Required.Enter the recipient’s U.S. TIN type indicator from the following values:
•0(Ze
ro)
=NoTI
Nrequired
• 1= SSN/ITIN
•2=EIN
•3=QI-
EIN, WP-EIN, WT-EIN
See current Instructions for Form 1042–S for when a TIN is not required.
359–398 Recipient’s Country
of Residence
for Tax Purposes
40Required.Enter the complete name of the recipient’s country of residence for tax
purposes in which the recipient claims residency under that country’s tax law,
whether or not you are applying a tax treaty benefit to this payment.
2004–45 I.R.B.825November 8, 2004

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
399–400 Recipient’s Country
of Residence
Code for Tax
Purposes
2Required.Enter the two-character Country Code for which the recipient is a
resident for tax purposes and on which the tax treaty benefits are based, whether or
not you are applying a tax treaty benefit to this payment. The rate of tax withheld is
determined by this code.
Note: Do not enter U.S. in the Country Code field. Enter “OC” (other country) onlywhen the country of residence
does not appear on the list or the payment is made to an international organization.
401–440 NQI/FLW-THR
Name
Line-1
40Provide the co
mplete name of the NQI/FLW-THR Entity. It is very important that
the complete n
ame of the NQI/FLW-THR entity be provided. Valid characters
are alpha, nu
meric, ampersand (&), hyphen (-), comma (,), or blank. Left-justify
and blank fil
l.
441–480 NQI/FLW-THR
Name
Line-2
40Enter supplementary information; otherwise enter blanks. Use this line for
additional names (e.g., partners or joint owners), for trade names, stage names,
aliases or titles. Also use this line for “care of” or “via”. Valid characters are alpha,
numeric, blank, ampersand (&), hyphen (-), comma (,), and the percent (%). The
percent [% (used as “in care of”)] is valid in the first position only.
481–520 NQI/FLW-THR
Name
Line-3
40See above.
521–522 Reserved2Enter blan
ks.
523–562 NQI/FLW-THR
Street
Line-1
40Enter the mailing address of the NQI/FLW-THR entity. Street address should
include number, street, apartment, or suite number (or P.O. Box if mail is not
delivered to street address). Abbreviate as needed. Left-justify and blank fill.
563–602 NQI/FLW-THR
Street
Line-2
40Enter supplementary NQI/FLW-THR entitystreet address information; otherwise,
blank fill.
603–642 NQI/FLW-
THR
City
40Enter the
city or town (or other locality name). Left-justify and blank fill.
643–644 Reserved2Enter blanks.
645–646 NQI/FLW-THR
Province Code
2Enter the two-alpha character Province Code abbreviation, if applicable. See “T”
record positions 117–118.
647–648 NQI/FLW
-THR
Country
Code
2Enterth
e two-character Country Code abbreviation, where the NQI/FLW-THR is
located
.
649–657 NQI/FLW-THR
Postal Code
9Enter the alpha/numeric foreign postal code. Enter this code in the left most
position and blank fill the remaining positions.DO NOTuse hyphens or blanks
between numbers or letters (e.g., if the postal code written as A6B 3C5 input as
A6B3C5). Left-justify.
658–666 NQI/FLW-THR
U.S. TIN
9Enter the NQI/FLW-THR nine-digit U.S. Taxpayer Identification Number (TIN).
Do NOT enter hyphens or alpha characters.
Note: All NQI/FLW-THR fields are REQUIRED if the NQI/FLW-THR entity is involved in the payment structure.
667–706 Payer’s Name40Enter the name of the Payer of Income if different from the Withholding Agent.
Abbreviate as needed. If Withholding Agent and Payer are the same, blank fill.
707–715 Payer’s U.S. TIN9Enter the Payer’s U.S. Taxpayer Identification Number if there is an entry in the
Payer Name Field; otherwise leave blank.
716–727 State Income Tax
Withheld
12If State Tax has been withheld, enter that amount, in whole dollars (do not enter
cents). Right-justify and zero fill. If no entry, zero fill.
November 8, 20048262004–45 I.R.B.

Record Name: Recipient “Q” Record
Field
Positions Field TitleLength Description and Remarks
728–737 Payer’s State Tax
Number
10Enter the employer’s state I.D. number assigned by the state.
738–739 State Code2Enter the two-character State Code abbreviation.
740–760 Special Data Entries 21This field may be used for the filer’s own purposes (e.g., Do Not Mail). If this
field is not used, enter blanks.
761–770 Reserved10Enter blanks.
771–778 Record Sequence
Number
8
Required.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
"W" record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Ca
rriage
Return Li
ne Feed
2Enter blan
ks or carriage return line feed (CR/LF) characters.
Recipient “Q” Record Layout
Record
Type
Return
Type
Indicator
Pro Rata
Basis
Reporting
Income
Code
Gross
Income
Withholding
Allowance
Net
Income
Tax Rate Exemption
Code
1234–56–1718–2930–4142–4546–47
U.S. Tax
Withheld
Amount
Repaid
Recipient’s
Account
Number
Recipient
Code
Recipient’s
Name Line-1
Recipient’s
Name Line-2
Recipient’s
Name Line-3
Recipient’s
Street Line-1
48–5960–7172–9192–9394–133134–173174–213214–253
Recipi
ent’s
Street
Line-2
Recipi
ent’s
City
Recipi
ent’s
State
Recipi
ent’s
Provin
ce
Code
Recipi
ent’s
Countr
y
Code
Postal
or
ZIP Cod
e
Recipi
ent’s
U.S. TI
N
Recipi
ent’s
U.S. TI
N
Type
254–293294–333334–335336–337338–339340–348349–357358
Recipient’s
Country of
Residence for
Tax Purposes
Recipient’s
Country of
Residence Code
for Tax Purposes
NQI/FLW-THR
Name Line-1
NQI/FLW-THR
Name Line-2
NQI/FLW-THR
Name Line-3
Reserved
359–39
8
399–40
0
401–44
0
441–48
0
481–52
0
521–52
2
2004–45 I.R.B.827November 8, 2004

NQI/FLW-THR
Street Line-1
NQI/FLW-THR
Street Line-2
NQI/FLW-THR
City
ReservedNQI/FLW-THR
Province
Code
523–562563–602603–642643–644645–646
NQI/FLW-THR
Country Code
NQI/FLW-THR
Postal Code
NQI/FLW-THR
U.S. TIN
Payer’s
Name
Payer’s
U.S.
TIN
State Income
Tax Withheld
Payer’s State
Tax Number
647–648649–657658–666667–706707–715716–727728–737
State CodeSpecial Data
Entries
ReservedRecord Sequence
Number
Blank or Carriage Return Line Feed
738–739740–760761–770771–778779–780
Sec. 7. Reconciliation “C” Record
.01The “C” Record is a fixed record length of 780 positions and all positions listed are required. The “C” Record is a summary of
the number of “Q” Records for each Withholding Agent, Gross Amount Paid, and Total U.S. Tax Withheld.
.02This record will be written after the last “Q” Record filed for a given withholding agent. For each “W” Record and group of
“Q” Records on the file, there must be a corresponding “C” Record.
.03All alpha characters entered inthe “C” Record must be upper case.
Record Name: Reconciliation “C” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“C”.
2–9Total “Q” Records 8Required.Enter the total number of “Q” Records for this withholding agent.
Right-justify and zero fill.Do not enter all zeros.For example, 53 “Q” records are
entered as 00000053. See Part A, Sec. 4, Filing Requirements.
10–15Blank6Enter blanks.
16–30Total Gross Amount
Paid
15Required.Enter the total gross income amount in whole dollars(do not enter
cents). For example report $600.00 as 000000000600. An income amount other
than zero must be shown. Right-justify and zero fill.
31–45Total U.S. Tax
Withheld
15Required.Enter the total U.S. Federal tax withheld amount in whole dollars(do
not enter cents). For example report $600.00 as 000000000600. Right-justify
and zero fill.
46–770Reserved725Blank fill.
771–778 Record Sequence
Number
8
Requir
ed.Enter the number of the record as it appears within your file. The record
sequen
ce 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,
therea
fter, must be incremented by one in ascending numerical sequence, i.e., 2,
3, 4, et
c. Right-justify numbers with leading zeroes in the field. For example, the
"T" re
cord sequence number would appear as “00000001” in the field, the first
“W” re
cord would be “00000002”, the first “Q” record, “00000003”, the second
“Q” re
cord, “00000004” and so on until you reach the final record of the file, the
“F” re
cord.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed (CR/LF) characters.
November 8, 20048282004–45 I.R.B.

Reconciliation “C” Record Layout
Record
Type
Total “Q”
Records
BlankTotal Gross
Amount
Paid
Total U.S.
Tax
Withheld
ReservedRecord
Sequence
Number
Blank or
Carriage
Return Line
Feed
12–910–1516–3031–4546–770771–778779–780
Sec. 8. End of Transmission “F” Record
.01The “F” Record is a fixed record length of 780 positions and allpositions listed are required. The “F” Record is a summary of
the number of withholding agents and media count in the entire file.
.02This record will be written after the last “C” Record of the entire file. End the file with an End of Transmission “F” Record.
No data will be read after the “F” Record. Only a “C” Record may precede the “F” Record. The “F” Record may only be followed
by a tape mark, a trailer label or a combination of both.
.03All alpha characters entered in the “F” Record must be upper case.
Record Name: End of Transmission “F” Record
Field
Positions Field TitleLength Description and Remarks
1Record Type1Required.Enter“F”.
2–4Withholding Agent
Count
3Required.Enter the total number of withholding agents on this file. This count
must be the same as the total number of “W” records. Right-justify and zero fill.
5–7Media Count3Required.Enter the total number of media for this transmission. Right-justify
and zero fill.
8–770Reserved763Blank fill.
771–778 Record Sequence
Number
8
Required.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
“W” record would be “00000002”, the first “Q” record, “00000003”, the second
“Q” record, “00000004” and so on until you reach the final record of the file, the
“F” record.
779–780 Blank or Carriage
Return Line Feed
2Enter blanks or carriage return line feed characters (CR/LF).
End of
Transmission “F” Record Layout
Record TypeWithholding Agent
Count
Media CountReservedRecord
Sequence
Number
Blank or Carriage
Return
Line Feed
12–45–78–770771–778779–780
2004–45 I.R.B.829November 8, 2004

Part D. Extensions of Time and Waivers
Sec. 1. General — Extensions
.01An extension of time to file may be requested for Form 1042–S.
.02Submit Form 8809, Application for Extension of Time To File Information Returns, to IRS/ECC-MTB at the address listed in
.08 of this section. This form may be used to request an extension of time to file Form 1042–S submitted on paper, electronically or
magnetically to the IRS. Use a separate Form 8809 for each method of filing information returns you intendto 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.) 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 duedate. For example, if requesting an extension of time to file both
Forms 1099–INT and 1042–S, submit Form 8809 on or before February 28, 2005.
.04Assoonasitisapparentthat 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/ECC-MTB to respond to an extension request. Generally, IRS/ECC-MTB does not begin processing
extension requests until January. Extension requests received prior to January are input on a first come, first serve basis.
.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 withholding agents (50 or less) may be done by submitting Form 8809 and attach-
ing a list of the withholding agents names and associated TINs.The listing must be attached toensure an extension is recorded
for all withholding agents.Form 8809 may be computer-generated or photocopied. Be sure to use the most recently updated version
and include all the pertinent information.
.07Requests for an extension of time to file for more than 50 withholding agents arerequiredto be submitted electronically or
magnetically. IRS encourages requests for 10 to 50 withholding agents 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-Enterprise Computing Center at Martinsburg
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/ECC-MTB 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/ECC-MTB after the due date, are treated astimely 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/ECC-MTB will
be used as the filing date.
.10Transmitters requesting an extension of time for multiple withholding agents will receive one approval letter, accompanied by
a list of withholding agents 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
filesassoonasprepared.DonotwaitforMCC’s response to your second extension request.
.12If an extension request is approved, the approval letter should be kept on file.DO NOTsend the approval letter or copy of the
approval letter to IRS/ECC-MTB with the magnetic media file or tothe Philadelphia Service Center where the paper Forms 1042–S
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 8809must
be 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.
November 8, 20048302004–45 I.R.B.

.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 1187.
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/ECC-MTB assigned Transmitter Control Code (TCC), Form 4419, Application for Filing Infor-
mation 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, Application for
Extension of Time To File Information Returns, in the same package as the corresponding media or fax it to 304–264–5602. For
extension requests filed electronically, the transmitter must fax Form 8809the same day the transmission is made.
.04 Transmitters submitting an extension of time electronically or magnetically should not submit a list of withholding
agents names and TINs with Form 8809 sincethis 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 extension requests filed on magnetic media beforeJanuary 1, or electronically beforeJanuary 6.
.06Each piece of magnetic mediamusthave an external media label containing the following information:
(a)Transmitter name
(b)Transmitter Control Code (TCC)
(c)Tax year
(d)The words “Extension of Time”
(e)Record count
.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 — Extensi
on of Time
.01Positions 6 through 188 of the following record should contain information about the withholding agent for whom the extension
of time to file is being requested. Do not enter transmitter information in these fields.OnlyoneTCCmaybepresentinafile.
Record Layout for Extension of Time
Field
Positions Field TitleLength Description and Remarks
1–5Transmitter
Control Code
5Required.Enter the five-digit Transmitter Control Code (TCC) issued by IRS.
Only one TCC per file is acceptable.
6–14Withholding
Agent’s TIN
9Required.Must be the valid nine-digit TIN assigned to the withholding agent.
Do not enter blanks, hyphens or alpha characters.All zeros, ones, twos, etc.,
will have the effect of an incorrect TIN. For foreign entities that are not required
to have a TIN, this field may be blank; however, the Foreign Entity Indicator,
position 187,mustbe set to “X.”
15–54Withholding
Agent’s Name
40Required.Enter the name of the withholding agent whose TIN appears in positions
6–14. Left-justify information and fill unused positions with blanks.
55–94Second
Withholding
Agent’s Name
40If additional space is needed, this field may be used to continue name line
information (e.g., c/o First National Bank); otherwise, enter blanks.
95–134Withholding
Agent’s Address
40Required.Enter the withholding agent’s address. Street address should include
number, street, apartment or suite number (or P.O. Box if mail is not delivered to
a street address).
135–174 Withholding
Agent’s City
40Required.Enter withholding agent’s city, town, or post office.
Note: 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.
2004–45 I.R.B.831November 8, 2004

Record Layout for Extension of Time
Field
Positions Field TitleLength Description and Remarks
175–176 Withholding
Agent’s State
2Required.Enter the withholding agent’s valid U.S. Postal Service state
abbreviation. (Refer to Part A, Sec. 17.)
177–185 Withholding
Agent’s
ZIP Code
9Required.Enter withholding agent’s ZIP Code. If using a five-digit ZIP Code,
left-justify information and fill unused positions with blanks.
186Document
Indicator
1Required.Enter the appropriate document code that indicates the form for which
you are requesting an extension of time.
CodeDocument
41042–S
187Foreign Entity
Indicator
1Enter “X” if the withholding agent is a foreign entity.
Note: A foreig
n entity is not required to have a TIN.
188Recipient Request
Indicator
1Enter “X” if the extension request is to furnish statements to the recipients of the
information return.
Note: A separate file is required for this type of extension request. A file must either contain all blanks or all X’s
in this field.
189–198 Blank10Enter blanks.
199–200 Blank2Enter blanks or carriage return/line feed (CR/LF) characters.
Extension of Time Record Layout
Transmitter
Control Code
Withholding
Agent’s TIN
Withholding
Agent’s Name
Second
Withholding
Agent’s Name
Withholding
Agent’s
Address
Withholding
Agent’s City
1–56–1415–5455–9495–134135–174
Withholding
Agent’s State
Withholding
Agent’s ZIP
Code
Document
Indicator
Foreign
Entity
Indicator
Recipient
Request
Indicator
BlankBlank or
CR/LF
175–176177–185186187188189–198199–200
Sec. 4. Extension of Time for Recipient Copies of Information Returns
.01Request anextension of time to furnish the statements to recipientsof Form1042–S by submitting a letter to IRS/ECC-MTB
at the address listed in Part D, Sec. 1.08. The letter should contain the following information:
(a)Withholding Agent’s name
(b)TIN
(c)Address
(d)Type of return
(e)Specify that the extension request isto provide statements to recipients
(f)Reason for delay
(g)Signature of withholding agent or duly authorized person.
.02Requests for an extension of time to furnish statements to recipients of Form1042–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
bythedateonwhichthestatements are due to the recipients.
November 8, 20048322004–45 I.R.B.

.03Generally, only the withholding agent may sign the letter requesting the extension for recipient copies. A transmitter must
have a contractual agreement with the withholding agents 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 withholding agents electronically or
magnetically, you must use theformat specifications in Sec. 3.
.04Requests for a recipient extension of time to file for more than 50 withholding agents are required to be submitted electronically
or magnetically. IRS encourages requests for 10 to 50 withholding agents to be filed electronically or magnetically. (See Sec. 3, for
record layout.) The request may be filed electronically, on cartridges, or 3
1
/2-inch diskettes.
Sec. 5. Form 8508, Request for Waiver From Filing Information Returns Magnetically
.01If a withholding agent is required to file on magnetic media but failstodoso(orfailstofileelectronicallyinlieuofmagnetic
media filing) and does not have an approved waiver on record, the withholding agent will be subjectto a penalty of $50 per return in
excess of 250. (For penalty information, refer to the Penalty Section of theGeneral Instructions for Form 1042–S.)
.02If withholding agents 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 Magnetically, to IRS/ECC-MTB. Form 8508 can be obtained on the IRS Website atw
ww.irs.govor by calling
toll-free 1–800–829–3676.
.03Even though a withholding agent may submit as many as 249 corrections on paper, IRS encourages electronic or magnetic
filing of corrections. Once the 250 threshold has been met, filersare 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 withholding agent 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 withholding agent. Do not submit a list of withholding agents.
.06All information requested on Form 8508 must beprovided 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.
Withholding agents may not apply for a waiver for more than one tax year at a time; application must be made each year a waiver is
necessary. Waivers, after the first year, are grantedonly in cases of undue hardship or catastrophic events.
.08Form 8508 may be photocopied or computer-generated as long as itcontains all the information requested on the original form.
.09Filers are encouraged to submit Form 8508 to IRS/ECC-MTB at least 45 days before the due date of the returns. Generally,
IRS/ECC-MTB 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-Enterprise Computing Center at Martinsburg
Information Reporting Program
240 Murall Drive
Kearneysville, WV 25430
.11Waivers are evaluated on a case-by-case basis and are approved ordenied 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/ECC-MTB to respond to a
waiver request.
.12If a waiver request is approved, keep the approval letter on file.DO NOTsend a copy of the approved waiver to the Philadelphia
Service Center.
.13An approved waiver only applies to the requirement for filing Form 1042–S electronically/magnetically. The withholding agent
must still timely file information returns on the official IRS paper forms or an acceptable substitute form with the Philadelphia Service
Center.
2004–45 I.R.B.833November 8, 2004

Part IV. Items of General Interest
Archer Medical Savings
Accounts — Trustees’ Reports
on the Number of Archer
MSAs Established Between
January 1, 2004, and June
30, 2004
Announcement 2004–82
Purpose
The purpose of this announcement is
to notify trustees and custodians that they
must report to the Internal Revenue Ser-
vice (IRS) the number of Archer MSAs
established between January 1, 2004, and
June 30, 2004. Trustees must report this
information to IRS on Form 8851, no later
than January 3, 2005. Form 8851 will soon
be available atwww.irs.gov.
Archer Medical Savings Accounts
(Archer MSAs)
Archer MSAs are a pilot project autho-
rized by section 220 of the Internal Rev-
enue Code. The Working Families Tax
Relief Act of 2004 § 322, amends sec-
tions 220(j)(4), (5) of the Code to require
that trustees of Archer MSAs report the
number of Archer MSAs established be-
tween January 1, 2004, and June 30, 2004.
Trustees must report this information to
IRS by January 3, 2005. Trustees do not
report Archer MSAs established in 2003.
Archer MSAs will terminate if the number
of individuals establishing Archer MSAs
exceeds certain numerical limits. If these
limitations are exceeded in 2004, 2004 will
be a “cut-off year” after which, in general,
no new Archer MSAs can be established.
IRS will publish no later than February 1,
2005, the number of Archer MSAs estab-
lished and whether 2004 is a cut-off year.
Suspension of Tax-Exempt
Status of an Organization
Identified With Terrorism
Announcement 2004–87
I. Purpose
This announcement is a public notice of
the suspension under section 501(p) of the
Internal Revenue Code of the federal tax
exemption of a certain organization that
has been designated as supporting or en-
gaging in terrorist activity or supporting
terrorism. Contributions made to an organ-
ization during the period that the organiza-
tion’s tax-exempt status is suspended are
not deductible for federal tax purposes.
II. Background
The federal government has designated
a number of organizations as supporting or
engaging in terrorist activity or supporting
terrorism under the Immigration and Na-
tionality Act, the International Emergency
Economic Powers Act, and the United Na-
tions Participation Act of 1945. Federal
law prohibits most contributions to orga-
nizations that have been so designated.
Section 501(p) of the Code was enacted
as part of the Military Family Tax Relief
Act of 2003 (P.L. 108–121), effective
November 11, 2003. Section 501(p)(1)
suspends the exemption from tax un-
der section 501(a) of any organization
described in section 501(p)(2). An organ-
ization is describedin section 501(p)(2)
if the organization is designated or oth-
erwise individually identified (1) under
certain provisions of the Immigration and
Nationality Act as a terrorist organization
or foreign terrorist organization; (2) in or
pursuant to an Executive Order which is
related to terrorism and issued under the
authority of the International Emergency
Economic Powers Act or section 5 of the
United Nations Participation Act of 1945
for the purpose of imposing on such or-
ganization an economic or other sanction;
or (3) in or pursuant to an Executive Order
issued under the authority of any federal
law, if the organization is designated or
otherwise individually identified in or pur-
suant to the Executive Order as supporting
or engaging in terrorist activity (as de-
fined in the Immigration and Nationality
Act) or supporting terrorism (as defined in
the Foreign Relations Authorization Act)
and the Executive Order refers to section
501(p)(2).
Under section 501(p)(3) of the Code,
suspension of an organization’s tax ex-
emption begins on the date of the first pub-
lication of a designation or identification
with respect to the organization, as de-
scribed above, or the date on which section
501(p) was enacted, whichever is later.
This suspension continues until all desig-
nations and identifications of the organiza-
tion are rescinded under the law or Exec-
utive Order under which such designation
or identification was made.
Under section 501(p)(4) of the Code,
no deduction is allowed under any pro-
vision of the Internal Revenue Code for
any contribution to an organization during
any period in which the organization’s
tax exemption is suspended under section
501(p). Thus, for example, no charitable
contribution deduction is allowed under
section 170 (relating to the income tax),
section 545(b)(2) (relating to undistributed
personal holding company income), sec-
tion 556(b)(2) (relating to undistributed
foreign personal holding company in-
come), section 642(c) (relating to chari-
table set asides), section 2055 (relating to
the estate tax), section 2106(a)(2) (relating
to the estate tax for nonresident aliens)
and section 2522 (relating to the gift tax)
for contributions made to the organization
during the suspension period.
On October 13, 2004, the organiza-
tion listed below was designated under
Executive Order 13224, entitled “Block-
ing Property and Prohibiting Transactions
With Persons Who Commit, Threaten To
Commit, or Support Terrorism.”
III. Notice of Suspension and
Non-deductibility of Contributions
The organization whose tax exemption
has been suspended under section 501(p)
and the effective date of such suspension
are listed below. Contributions made to
this organization during the period of sus-
pension are not deductible for federal tax
purposes.
Islamic African Relief Agency – USA
a/k/a Islamic American Relief
Agency – USA
Columbia, MO
Effective date: 10–13–04
IV. Federal Tax Filings
An organization whose exempt status
has been suspended under section 501(p)
does not file Form 990 and is required to
file the appropriate Federal income tax re-
November 8, 20048342004–45 I.R.B.

turns for the taxable periods beginning on
the date of the suspension. The organi-
zation must continue to file all other ap-
propriate federal tax returns, including em-
ployment tax returns, and may also have to
file federal unemployment tax returns.
V. Contact Information
For additional information regarding
the designation or identification of an or-
ganization described in section 501(p)(2),
contact the Compliance Division at the Of-
fice of Foreign Assets Control of the U.S.
Treasury Department at 202–622–2490.
Additional information is also avail-
able for download from the Office’s
Internet Home Page atwww.treas.gov/
offices/eotffc/ofac/index.html
For additional information regarding
the suspension of the federal tax exemp-
tion of an organization under section
501(p), contact Ronald J. Shoemaker at
(202) 283–9475 at the Internal Revenue
Service.
Deletions From Cumulative
List of Organizations
Contributions to Which
are Deductible Under Section
170 of the Code
Announcement 2004–89
The name of an organization that no
longer qualifies as an organization de-
scribed in section 170(c)(2) of the Internal
Revenue Code of 1986 is listed below.
Generally, the Service will not disallow
deductions for contributions made to a
listed organization on or before the date
of announcement in the Internal Revenue
Bulletin that an organization no longer
qualifies. However, the Service is not
precluded from disallowing a deduction
for any contributions made after an or-
ganization ceases to qualify under section
170(c)(2) if the organization has not timely
filed a suit for declaratory judgment under
section 7428 and if the contributor (1) had
knowledge of the revocation of the ruling
or determination letter, (2) was aware that
such revocation was imminent, or (3) was
in part responsible for or was aware of the
activities or omissions of the organization
that brought about this revocation.
If on the other hand a suit for declara-
tory judgment has been timely filed,
contributions from individuals and or-
ganizations described in section 170(c)(2)
that are otherwise allowable will continue
to be deductible. Protection under sec-
tion 7428(c) would begin on November
8, 2004, and would end on the date the
court first determines that the organization
is not described in section 170(c)(2) as
more particularly set forth in section 7428
(c)(1). For individual contributors, the
maximum deduction protected is $1,000,
with a husband and wife treated as one
contributor. This benefit is not extended
to any individual, in whole or in part, for
the acts or omissions of the organization
that were the basis for revocation.
Michael & Laura Gallop
Family Foundation
Agoura Hills, CA
Notice of Disposition of
Declaratory Judgment
Proceedings Under Section
7428
Announcement 2004–90
This announcement serves notice to
donors that on July 7, 2004, the United
States Tax Court granted the Service’s
motion to dismiss the case. Thus, the or-
ganization listed below is not recognized
as an organization described in section
501(c)(3) and is not exempt from taxation
under section 501(a), effective November
17, 1995.
Julie Renee Phelan Foundation f.k.a.
Assured Nonprofit Services, Inc.
Seattle, WA
Section 7428(c) Validation
of Certain Contributions
Made During Pendency
of Declaratory Judgment
Proceedings
Announcement 2004–91
This announcement serves notice to po-
tential donors that the organization listed
below has recently filed a timely declara-
tory judgment suit under section 7428 of
the Code, challenging revocation of its
status as an eligibledonee under section
170(c)(2).
Protection under section 7428(c) of the
Code begins on the date that the notice
of revocation is published in the Internal
Revenue Bulletin and ends on the date
on which a court first determines that an
organization is not described in section
170(c)(2), as more particularly set forth in
section 7428(c)(1). In the case of indi-
vidual contributors, the maximum amount
of contributions protected during this pe-
riod is limited to $1,000.00, with a hus-
band and wife being treated as one contrib-
utor. This protection is not extended to any
individual who was responsible, in whole
or in part, for the acts or omissions of the
organization that were the basis for the
revocation. This protection also applies
(but without limitation as to amount) to or-
ganizations described in section 170(c)(2)
which are exempt from tax under section
501(a). If the organization ultimately pre-
vails in its declaratory judgment suit, de-
ductibility of contributions would be sub-
ject to the normal limitations set forth un-
der section 170.
Open Classrooms Chartered
Baltimore, MD
Section 7428(c) Validation
of Certain Contributions
Made During Pendency
of Declaratory Judgment
Proceedings
Announcement 2004–92
This announcement serves notice to po-
tential donors that the organization listed
below has recently filed a timely declara-
tory judgment suit under section 7428 of
the Code, challenging revocation of its
status as an eligibledonee under section
170(c)(2).
Protection under section 7428(c) of the
Code begins on the date that the notice
of revocation is published in the Internal
Revenue Bulletin and ends on the date
on which a court first determines that an
organization is not described in section
2004–45 I.R.B.835November 8, 2004

170(c)(2), as more particularly set forth in
section 7428(c)(1).
In the case of individual contributors,
the maximum amount of contributions
protected during this period is limited to
$1,000.00, with a husband and wife being
treated as one contributor. This protec-
tion is not extended to any individual who
was responsible, in whole or in part, for
the acts or omissions of the organization
that were the basis for the revocation.
This protection also applies (but without
limitation as to amount) to organizations
described in section 170(c)(2) which are
exempt from tax under section 501(a). If
the organization ultimately prevails in its
declaratory judgment suit, deductibility
of contributions would be subject to the
normal limitations set forth under section
170.
Michael & Laura Gallop
Family Foundation
Agoura Hills, CA
November 8, 20048362004–45 I.R.B.

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-
ingextendedtoapplytoavariationofthe
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 be-
ing 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
beingstatedinanewruling.
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 fol
lowing abbreviations in current use
and for
merly used will appear in material
publis
hedintheBulletin.
A—Individual.
Acq.—A
cquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank
.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cu
mulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Coo
perative.
Ct.D.—Court Decision.
CY—County.
D—Decede
nt.
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—Emp
loyer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduc
iary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Fo
reign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Fed
eral Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grante
e.
GP—General Partner.
GR—Grantor.
IC—Insura
nce Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited
Partner.
LR—Lessor.
M—Minor.
Nonacq.—No
nacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Persona
l Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Pa
rtnership.
PTE—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Re
al Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsi
diary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target
Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Trans
feree.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpay
er.
TR—Trust.
TT—Trustee.
U.S.C.—Uni
ted States Code.
X—Corporation.
Y—Corporation.
Z—Corporat
ion.
2004–45 I.R.B.iNovember 8, 2004

Numerical Finding List
1
Bulletins 2004–27 through 2004–45
Announcements:
2004-55, 2004-27 I.R.B.15
2004-56, 2004-28 I.R.B.41
2004-57, 2004-27 I.R.B.15
2004-58, 2004-29 I.R.B.66
2004-59, 2004-30 I.R.B.94
2004-60, 2004-29 I.R.B.43
2004-61, 2004-29 I.R.B.67
2004-62, 2004-30 I.R.B.103
2004-63, 2004-31 I.R.B.149
2004-64, 2004-35 I.R.B.402
2004-65, 2004-33 I.R.B.300
2004-66, 2004-35 I.R.B.402
2004-67, 2004-36 I.R.B.459
2004-68, 2004-38 I.R.B.508
2004-69, 2004-39 I.R.B.542
2004-70, 2004-39 I.R.B.543
2004-71, 2004-40 I.R.B.569
2004-72, 2004-41 I.R.B.650
2004-73, 2004-39 I.R.B.543
2004-74, 2004-40 I.R.B.579
2004-75, 2004-40 I.R.B.580
2004-76, 2004-40 I.R.B.588
2004-77, 2004-41 I.R.B.662
2004-78, 2004-40 I.R.B.592
2004-79, 2004-41 I.R.B.662
2004-80, 2004-41 I.R.B.663
2004-81, 2004-42 I.R.B.675
2004-82, 2004-45 I.R.B.834
2004-83, 2004-43 I.R.B.712
2004-84, 2004-43 I.R.B.712
2004-85, 2004-43 I.R.B.712
2004-87, 2004-45 I.R.B.834
2004-88, 2004-44 I.R.B.779
2004-89, 2004-45 I.R.B.835
2004-90, 2004-45 I.R.B.835
2004-91, 2004-45 I.R.B.835
2004-92, 2004-45 I.R.B.835
Notices:
2004-41, 2004-28 I.R.B.31
2004-43, 2004-27 I.R.B.10
2004-44, 2004-28 I.R.B.32
2004-45, 2004-28 I.R.B.33
2004-46, 2004-29 I.R.B.46
2004-47, 2004-29 I.R.B.48
2004-48, 2004-30 I.R.B.88
2004-49, 2004-30 I.R.B.88
2004-50, 2004-33 I.R.B.196
2004-51, 2004-30 I.R.B.89
2004-52, 2004-32 I.R.B.168
2004-53, 2004-33 I.R.B.209
Notices— Continued:
2004-54, 2004-33 I.R.B.209
2004-55, 2004-34 I.R.B.319
2004-56, 2004-35 I.R.B.375
2004-57, 2004-35 I.R.B.376
2004-58, 2004-39 I.R.B.520
2004-59, 2004-36 I.R.B.447
2004-60, 2004-40 I.R.B.564
2004-61, 2004-41 I.R.B.596
2004-62, 2004-40 I.R.B.565
2004-63, 2004-41 I.R.B.597
2004-64, 2004-41 I.R.B.598
2004-65, 2004-41 I.R.B.599
2004-66, 2004-42 I.R.B.677
2004-67, 2004-41 I.R.B.600
2004-68, 2004-43 I.R.B.706
2004-69, 2004-43 I.R.B.706
2004-70, 2004-44 I.R.B.724
2004-71, 2004-45 I.R.B.793
Proposed Regulations:
REG-208246-90, 2004-36 I.R.B.450
REG-138176-02, 2004-43 I.R.B.710
REG-153841-02, 2004-31 I.R.B.145
REG-163679-02, 2004-35 I.R.B.390
REG-163909-02, 2004-38 I.R.B.499
REG-108637-03, 2004-37 I.R.B.472
REG-120616-03, 2004-37 I.R.B.474
REG-124405-03, 2004-35 I.R.B.394
REG-131486-03, 2004-28 I.R.B.36
REG-131786-03, 2004-38 I.R.B.500
REG-145987-03, 2004-39 I.R.B.523
REG-145988-03, 2004-42 I.R.B.693
REG-149524-03, 2004-39 I.R.B.528
REG-150562-03, 2004-32 I.R.B.175
REG-152549-03, 2004-36 I.R.B.451
REG-154077-03, 2004-37 I.R.B.476
REG-169135-03, 2004-42 I.R.B.697
REG-171386-03, 2004-37 I.R.B.477
REG-101282-04, 2004-42 I.R.B.698
REG-101447-04, 2004-34 I.R.B.344
REG-106889-04, 2004-38 I.R.B.501
REG-116265-04, 2004-38 I.R.B.505
REG-117307-04, 2004-28 I.R.B.39
REG-124872-04, 2004-39 I.R.B.533
REG-128767-04, 2004-39 I.R.B.534
REG-129274-04, 2004-40 I.R.B.567
REG-129706-04, 2004-37 I.R.B.478
REG-129771-04, 2004-36 I.R.B.453
REG-130863-04, 2004-39 I.R.B.538
REG-131264-04, 2004-38 I.R.B.506
REG-135898-04, 2004-40 I.R.B.568
REG-136481-04, 2004-37 I.R.B.480
Revenue Procedures:
2004-38, 2004-27 I.R.B.10
Revenue Procedures— Continued:
2004-39, 2004-29 I.R.B.49
2004-40, 2004-29 I.R.B.50
2004-41, 2004-30 I.R.B.90
2004-42, 2004-31 I.R.B.121
2004-43, 2004-31 I.R.B.124
2004-44, 2004-31 I.R.B.134
2004-45, 2004-31 I.R.B.140
2004-46, 2004-31 I.R.B.142
2004-47, 2004-32 I.R.B.169
2004-48, 2004-32 I.R.B.172
2004-49, 2004-33 I.R.B.210
2004-50, 2004-33 I.R.B.211
2004-51, 2004-33 I.R.B.294
2004-52, 2004-34 I.R.B.319
2004-53, 2004-34 I.R.B.320
2004-54, 2004-34 I.R.B.325
2004-55, 2004-34 I.R.B.343
2004-56, 2004-35 I.R.B.376
2004-57, 2004-38 I.R.B.498
2004-58, 2004-41 I.R.B.602
2004-59, 2004-42 I.R.B.678
2004-60, 2004-42 I.R.B.682
2004-61, 2004-43 I.R.B.707
2004-62, 2004-44 I.R.B.728
2004-63, 2004-45 I.R.B.795
Revenue Rulings:
2004-63, 2004-27 I.R.B.6
2004-64, 2004-27 I.R.B.7
2004-65, 2004-27 I.R.B.1
2004-66, 2004-27 I.R.B.4
2004-67, 2004-28 I.R.B.28
2004-68, 2004-31 I.R.B.118
2004-69, 2004-36 I.R.B.445
2004-70, 2004-37 I.R.B.460
2004-71, 2004-30 I.R.B.74
2004-72, 2004-30 I.R.B.77
2004-73, 2004-30 I.R.B.80
2004-74, 2004-30 I.R.B.84
2004-75, 2004-31 I.R.B.109
2004-76, 2004-31 I.R.B.111
2004-77, 2004-31 I.R.B.119
2004-78, 2004-31 I.R.B.108
2004-79, 2004-31 I.R.B.106
2004-80, 2004-32 I.R.B.164
2004-81, 2004-32 I.R.B.161
2004-82, 2004-35 I.R.B.350
2004-83, 2004-32 I.R.B.157
2004-84, 2004-32 I.R.B.163
2004-85, 2004-33 I.R.B.189
2004-86, 2004-33 I.R.B.191
2004-87, 2004-32 I.R.B.154
2004-88, 2004-32 I.R.B.165
2004-89, 2004-34 I.R.B.301
2004-90, 2004-34 I.R.B.317
1
A cumulative list of all revenue rulings, revenueprocedures, Treasury decisions, etc., publishedin Internal Revenue Bulletins 2004–1 through 2004–26 is in Internal Revenue Bulletin
2004–26, dated June 28, 2004.
November 8, 2004ii2004–45 I.R.B.

Revenue Rulings— Continued:
2004-91, 2004-35 I.R.B.357
2004-92, 2004-37 I.R.B.466
2004-93, 2004-37 I.R.B.462
2004-94, 2004-38 I.R.B.491
2004-95, 2004-38 I.R.B.492
2004-96, 2004-41 I.R.B.593
2004-97, 2004-39 I.R.B.516
2004-98, 2004-42 I.R.B.664
2004-99, 2004-44 I.R.B.720
2004-100, 2004-44 I.R.B.718
2004-101, 2004-44 I.R.B.719
2004-102, 2004-45 I.R.B.784
2004-103, 2004-45 I.R.B.783
Tax Conventions:
2004-60, 2004-29 I.R.B.43
2004-81, 2004-42 I.R.B.675
Treasury Decisions:
9131, 2004-27 I.R.B.2
9132, 2004-28 I.R.B.16
9133, 2004-28 I.R.B.25
9134, 2004-30 I.R.B.70
9135, 2004-30 I.R.B.69
9136, 2004-31 I.R.B.112
9137, 2004-34 I.R.B.308
9138, 2004-32 I.R.B.160
9139, 2004-38 I.R.B.495
9140, 2004-32 I.R.B.159
9141, 2004-35 I.R.B.359
9142, 2004-34 I.R.B.302
9143, 2004-36 I.R.B.442
9144, 2004-36 I.R.B.413
9145, 2004-37 I.R.B.464
9146, 2004-36 I.R.B.408
9147, 2004-37 I.R.B.461
9148, 2004-37 I.R.B.460
9149, 2004-38 I.R.B.494
9150, 2004-39 I.R.B.514
9151, 2004-38 I.R.B.489
9152, 2004-39 I.R.B.509
9153, 2004-39 I.R.B.517
9154, 2004-40 I.R.B.560
9155, 2004-40 I.R.B.562
9156, 2004-42 I.R.B.669
9157, 2004-40 I.R.B.545
9158, 2004-42 I.R.B.665
9160, 2004-45 I.R.B.785
9161, 2004-43 I.R.B.704
2004–45 I.R.B.iiiNovember 8, 2004

Findings List of Current Actions on
Previously Published Items
1
Bulletins 2004–27 through 2004–45
Announcements:
99-76
Obsoleted by
T.D. 9157, 2004-40 I.R.B.545
2003-54
Updated and superseded by
Ann. 2004-72, 2004-41 I.R.B.650
2004-70
Amended by
Ann. 2004-77, 2004-41 I.R.B.662
Notices:
88-128
Supplemented by
Notice 2004-61, 2004-41 I.R.B.596
98-65
Superseded by
Rev. Proc. 2004-40, 2004-29 I.R.B.50
2001-50
Modified by
Rev. Proc. 2004-46, 2004-31 I.R.B.142
2002-70
Modified by
Notice 2004-65, 2004-41 I.R.B.599
2003-76
Supplemented and superseded by
Notice 2004-67, 2004-41 I.R.B.600
Modified by
Notice 2004-65, 2004-41 I.R.B.599
2004-2
Modified by
Notice 2004-50, 2004-33 I.R.B.196
2004-2,
Corrected by
Ann. 2004-67, 2004-36 I.R.B.459
Proposed Regulations:
INTL-116-90
Withdrawn by
REG-208246-90, 2004-36 I.R.B.450
REG-208254-90
Withdrawn by
REG-136481-04, 2004-37 I.R.B.480
REG-104683-00
Partially withdrawn by
Ann. 2004-64, 2004-35 I.R.B.402
REG-165579-02
Withdrawn by
Ann. 2004-69, 2004-39 I.R.B.542
Proposed Regulations— Continued:
REG-150562-03
Corrected by
Ann. 2004-68, 2004-38 I.R.B.508
Ann. 2004-73, 2004-39 I.R.B.543
Revenue Procedures:
79-61
Superseded by
Rev. Proc. 2004-44, 2004-31 I.R.B.134
89-37
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
94-64
Superseded by
Rev. Proc. 2004-38, 2004-27 I.R.B.10
96-18
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
96-53
Superseded by
Rev. Proc. 2004-40, 2004-29 I.R.B.50
96-60
Superseded by
Rev. Proc. 2004-53, 2004-34 I.R.B.320
98-41
Superseded by
Rev. Proc. 2004-56, 2004-35 I.R.B.376
2000-37
Modified by
Rev. Proc. 2004-51, 2004-33 I.R.B.294
2002-9
Modified and amplified by
Rev. Proc. 2004-41, 2004-30 I.R.B.90
2003-28
Superseded by
Rev. Proc. 2004-58, 2004-41 I.R.B.602
2003-30
Superseded by
Rev. Proc. 2004-54, 2004-34 I.R.B.325
2003-52
Superseded by
Rev. Proc. 2004-50, 2004-33 I.R.B.211
2003-73
Superseded by
Rev. Proc. 2004-62, 2004-44 I.R.B.728
2003-80
Superseded by
Rev. Proc. 2004-60, 2004-42 I.R.B.682
2003-83
Superseded by
Rev. Proc. 2004-63, 2004-45 I.R.B.795
Revenue Procedures— Continued:
2004-4
Modified by
Rev. Proc. 2004-44, 2004-31 I.R.B.134
2004-23
Modified by
Rev. Proc. 2004-57, 2004-38 I.R.B.498
Revenue Rulings:
54-379
Superseded by
Rev. Rul. 2004-68, 2004-31 I.R.B.118
58-120
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
62-60
Amplified by
Rev. Proc. 2004-53, 2004-34 I.R.B.320
70-58
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
73-354
Obsoleted by
Rev. Rul. 2004-76, 2004-31 I.R.B.111
78-371
Distinguished by
Rev. Rul. 2004-86, 2004-33 I.R.B.191
79-64
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
80-7
Amplified and clarified by
Rev. Rul. 2004-71, 2004-30 I.R.B.74
Rev. Rul. 2004-72, 2004-30 I.R.B.77
Rev. Rul. 2004-73, 2004-30 I.R.B.80
Rev. Rul. 2004-74, 2004-30 I.R.B.84
80-366
Obsoleted by
Rev. Rul. 2004-90, 2004-34 I.R.B.317
81-100
Clarified and modified by
Rev. Rul. 2004-67, 2004-28 I.R.B.28
85-70
Amplified and clarified by
Rev. Rul. 2004-71, 2004-30 I.R.B.74
Rev. Rul. 2004-72, 2004-30 I.R.B.77
Rev. Rul. 2004-73, 2004-30 I.R.B.80
Rev. Rul. 2004-74, 2004-30 I.R.B.84
92-105
Distinguished by
Rev. Rul. 2004-86, 2004-33 I.R.B.191
1
A cumulative list of current actions on previously published items in Internal Revenue Bulletins 2004–1 through 2004–26 is in Internal Revenue Bulletin 2004–26, dated June 28, 2004.
November 8, 2004iv2004–45 I.R.B.

Revenue Rulings— Continued:
95-63
Modified by
Rev. Rul. 2004-103, 2004-45 I.R.B.783
2004-75
Amplified by
Rev. Rul. 2004-97, 2004-39 I.R.B.516
Treasury Decisions:
9031
Removed by
T.D. 9152, 2004-39 I.R.B.509
2004–45 I.R.B.vNovember 8, 2004
*U.S.G .P.O. : 2 004 —310–365/60160